Linked here is a PDF copy of my detailed analysis of AFLAC Inc. (AFL). Below are some highlights from the above linked analysis:
Company Description: Aflac Incorporated engages in the marketing and sale of supplemental health and life insurance plans in the United States and Japan.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1.) Avg. High Yield Price, 2.) 20-Year DCF Price, 3.) Avg. P/E Price and 4.) Graham Number. AFL doesn't do very well in this section. It is trading at a discount to only one of the four valuations listed above. If I exclude the high and low valuation, and average the remaining two valuations, AFL is trading at a 8.4% premium. AFL has a Star deducted for trading at a premium in excess of 5%.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description: 1.) Rolling 4-yr Div. > 15%, 2.) Dividend Growth Rate, 3.) Years of Div. Growth, 4.) 1-Yr. > 5-Yr Growth and 5.) Payout 15% of avg. AFL earned Stars in all four categories [5.) is a deduct only, if failed]. AFL topped out in this section.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description: 1.) NPV MMA Diff. and 2.) Years to >MMA. As well as AFL performed in the previous section, it failed dismally in this section earning no Stars.
Other: The AFLAC duck is probably one of the most recognized icons currently used in advertising. My kids (12 and 10) absolutely love their commercials.
Conclusion: AFL lost one Star in the Fair Value section, added four Stars in the Dividend Analytical Data section and added no Stars in the Dividend Income vs. MMA section for a total of Three Stars which rates it as a 3-Star Hold. AFL is a great company and has all the dividend analytical attributes that I am looking for, but at its current price and dividend yield, I do not see it as a good value. I will wait for a better buying opportunity before adding to my current position.
Disclaimer: As always this is only my opinion and you should not rely on it. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I own shares of AFL.
What are your thoughts on AFL? Do your kids like the duck?
Recent Stock Analyses:
Popular Posts - Last 7 days
Monday, October 31, 2011 will mark my fourth full year of writing as Dividends4Life . It is hard to believe another year has passed. Like th...
Forget about those 'Make 534% On Every Trade' ads that you see on many financial websites. Real wealth is built with sweat equity an...
Presented below are my dividend stock and ETF/CEF holdings. This is not a recommendation to buy these securities. I have classified some of...
Like many that came before me, I am on a journey to construct a portfolio that will provide me... Dividends 4 Life
There are income investors and Dividend Growth investors. While the distinction is rather simple, it slips past many casual observers. Inco...
D4L-Premium Services is designed to provide the busy dividend growth investor with a wealth of relevant information. Each week the D4L-Prem...
Dividends are not paid with sales, earnings, EPS, EBIT or EBITDA. Instead dividends are paid with cash. As an investor, you want to pay clos...
Linked here is a detailed quantitative analysis of Illinois Tool Works Inc. (ITW). Below are some highlights from the above linked analysis...
Linked here is a detailed quantitative analysis of Colgate-Palmolive (CL). Below are some highlights from the above linked analysis: Comp...
Many people spend their investing lives jumping from one investing strategy to another. It seems they are always looking for that hot combi...