Linked here is a PDF copy of my detailed analysis of AFLAC Inc. (AFL) (alt.1, alt.2). 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 is trading at a discount to 1.) and 2.) above. If I exclude the high and low valuation, and average the remaining two valuations, AFL is trading at a 0.1% premium. AFL earns a Star for trading at a fair value.
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 a Star in 1.), 2.) and 3.) above. With a 20% average dividend increase, AFL will more than double its dividend every 5 years. It's 2008 dividend increase was 24%.
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. AFL did not earn any Stars in this section. At its current yield of 1.50% it would take 11 years for it to earn in excess of a 4.61% MMA. AFL's NPV MMA Diff. of $9,599 is slightly below the $10,000 I like to see.
Other: AFL is a S&P 500 Dividend Aristocrat and is a member of The Broad Dividend Achievers™ Index. It has increased its quarterly cash dividend payments for 26 consecutive years.
Conclusion: AFL earned one Star in the Fair Value section, three Stars in the Dividend Analytical Data section and no Stars in the Dividend Income vs. MMA section for a total of four Stars, which rates it as a 4 Star-Buy.
AFL is your traditional dividend investment with a low current yield (1.5%) and high dividend growth (20%). Management's ability to execute its business plan and provide a steady dividend increases makes this one of my favorite long-term stocks. I will continue to increase my position in AFL as my allocation allows until circumstances dictate a change.
Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. 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 (3.4% of my Income Portfolio).
What are your thoughts on AFL?
Recent Stock Analyses:
Popular Posts - Last 7 days
A stock dividend , also known as a "scrip dividend", is a dividend payment made with stock instead of cash. Sometimes when compani...
Each Sunday I highlight any notable articles that I came across over the past week. Though I may not always agree with each of the articles ...
The S&P 500 Index is owned and maintained by Standard & Poor's, a division of McGraw-Hill. The index was first published in 195...
Linked here is a detailed quantitative analysis of Pepsico, Inc. (PEP). Below are some highlights from the above linked analysis: Company...
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...
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
Linked here is a detailed quantitative analysis of Johnson Controls, Inc. (JCI). Below are some highlights from the above linked analysis: ...
We all want to succeed in everything that we do, including investing in the stock market. Though I have no analytical data to back it up, I...
Linked here is a detailed quantitative analysis of HCP, Inc. (HCP). Below are some highlights from the above linked analysis: Company Des...