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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Aflac in Focus
Aflac (AFL - Free Report) is headquartered in Columbus, and is in the Finance sector. The stock has seen a price change of 1.39% since the start of the year. The insurer is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 2.39% compared to the Insurance - Accident and Health industry's yield of 2.54% and the S&P 500's yield of 1.6%.
Looking at dividend growth, the company's current annualized dividend of $2 is up 19% from last year. Aflac has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.75%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Aflac's payout ratio is 27%, which means it paid out 27% of its trailing 12-month EPS as dividend.
AFL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $6.41 per share, which represents a year-over-year growth rate of 2.89%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AFL is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Aflac (AFL) Could Be a Great Choice
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Aflac in Focus
Aflac (AFL - Free Report) is headquartered in Columbus, and is in the Finance sector. The stock has seen a price change of 1.39% since the start of the year. The insurer is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 2.39% compared to the Insurance - Accident and Health industry's yield of 2.54% and the S&P 500's yield of 1.6%.
Looking at dividend growth, the company's current annualized dividend of $2 is up 19% from last year. Aflac has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.75%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Aflac's payout ratio is 27%, which means it paid out 27% of its trailing 12-month EPS as dividend.
AFL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $6.41 per share, which represents a year-over-year growth rate of 2.89%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AFL is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).