Here on other analysis for Polliesdividend. In my portfolio I have no financials. And for a good diversification I want to look in this sector for an investment. There are a lot of financials. I choose to investigate Aflac after numerous blog articles from some of my favorite bloggers.
This analysis is on Aflac Inc (AFL).
Company (from google finance): Aflac Incorporated (Aflac) is a general business holding company and acts as a management company, overseeing the operations of its subsidiaries by providing management services. Its business is supplemental health and life insurance, through its subsidiary, American Family Life Assurance Company of Columbus, which operates in the United States and as a branch in Japan. Aflac’s insurance business consists of two segments: Aflac Japan and Aflac U.S. Aflac Japan sells voluntary supplemental insurance products, including cancer plans, general medical indemnity plans, medical/sickness riders, care plans, living benefit life plans, ordinary life insurance plans and annuities. Aflac U.S. sells voluntary supplemental insurance products including loss-of-income products and products designed to protect individuals from depletion of assets (hospital indemnity, fixed-benefit dental, vision care, accident, cancer, critical illness/ critical care, and hospital intensive care plans)..
Dividend Aristocrat: Aflac is paying Dividend for 31 years in a row! And is a Dividend Champion. It’s number 85 on the CCC-list form David Fish! And is a 3 star stock on Morningstar.com. That’s a Passed!
Dividend Yield > 2.5%: The dividend Yield of AFL is 2,48%. It’s above the industry average of 2.0%. Although is below the yield I want for the Pollie-Code, I think this is not a problem because its well above the industry average. And it is a metric that changes everyday with the stock price. The current Yield is very close to the requirement of the Pollie-Code. Therefore Aflac passed the second Pollie-code.
Dividend payout <70%: The current dividend is $1.48 and AFL has an earnings projection of around $ 6. The dividend payout is roughly 23%. This is way below the maximum ratio. This also means that they can keep those dividend increases coming for a long, long time. And that makes me happy! So also passed for this point.
DGR 1 year > 0%: The dividend growth rate for 1, 3, 5 en 10 years are 6.0, 7.6, 8.1 and 16.8. This shows a healthy (expected) increase over the years. With a 3 years average over 5% that makes me excited. So AFL also passed the fourth Pollie-code.
P/E-ratio < 15: The industry average is 15.9. AFL has a current P/E ratio is 9.1. This is very low and a rarity for a dividend aristocrat. This looks like a bargain. If I look at other companies the ratio is definitely lower than Chubb (CB) and Cincinnati Financial (CINF) of 10.4 and 18 respectively. Thanks to the Dividend Diplomats. This is another pass on the Pollie-code.
EPS > 0: The EPS is 6.45. So AFL also passed the sixth Pollie-Code
ROE > 10%: Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. The current ROE is 20.40%. Another pass.
Market Cap. > 100M: No problem at this point. More than $ 27.130 Mil. Another pass.
Chowder Rule > 12: Named after “Seeking Alpha” member Chowder. This is a method of identifying candidates for purchase based on a combination of yield and (5-year) dividend growth rate. When the sum of these elements is above 12%, the company presents an attractive entry point (8% for utilities). When the figure is above 8%, an existing holding is still considered worthy of being retained. The current Chowder rule is 10.6. This is just below the requirements of the Pollie-Code. This is therefore a fail on the Pollie-code.
Stock price 52wk high-25%: The 52 wk high and low are: 67.62 and 57.36. This means that AFL will be in my buying zone when the stock price is below 65.06 ((67.62-57.36)*0,75 + 57.36). At this moment it is a pass on the Pollie-Code.
Beta: I think it’s important to have low Beta stocks in my portfolio. This helps to have a stable income all the time, even when the market has a rapid decline. The Beta for AFL is 1.55. It is higher than I normally want, but this is normal for this industry.
Conclusion: When I look at the analysis, AFL passed 9 out of 10 from the Pollie-code. The Pollie-code only failed at the ROE. It is a great Stock!. Considering all the data AFL is a stock that is buyable. At this moment I don’t have enough cash to initiate a position. Normally I don’t want the fees for my investment be higher than 1% of my investment. So I need to save a little bit more (or re-allocate some assets).
What are you – the readers, thoughts on Aflac? Is it a buy? Please comment on my analysis and thanks for stopping by!