Trades – Aflac, Inc. (AFL) Purchase

Aflac - Logo

After watching and reviewing Aflac, Inc. (AFL) for the past month and a half, today I purchased 30 shares for $1,501.65, including transaction fees, giving me a cost basis of $50.06 per share. This purchase gives me an additional $42.00 in annual dividends, increasing my projected forward 12-month dividends from $887.08 to $929.08. Given that my only current financial holding is a bit speculative (Prospect Capital Corp – PSEC), this will add some much needed diversity. Unfortunately, with the market swelling during the past three months, many opportunities appear to be overvalued right now.

Part of what has attracted me to AFL is the low payout ratio, the dividend growth champion status, and the reasonable valuation. I believe that AFL has plenty of room to increase their dividends over the next few years.

A quick business summary from Bloomberg:

“Aflac, Inc. is a general business holding company. The Company, through its subsidiaries, provides supplemental insurance to individuals in the United States and Japan. Aflac’s products include accident/disability plans, cancer expense plans, short-term disability plans, sickness and hospital indemnity plans, hospital intensive care plans, and fixed-benefit dental plans.”

Dividend Monk wrote up a great analysis on Aflac back in August 2012 which can be found here.

I have updated my Investments page with this transaction.

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Comments

  1. Great buy here.

    I love AFL as a company. They’ve got one of the best brands in insurance and the shares are undeniably cheap. They have derisked the balance sheet quite a bit and I still see a lot of growth ahead here.

    I think you’ll be a happy shareholder!

    Best wishes.

    • Thanks DM! I am also very high on AFL and think they have room to really grow as a business and in offering me great dividend growth over the next few years! I know you are a happy investor of them as well!

      Thanks for commenting!

  2. I’ve been looking at adding to my AFL position but I think I’m going to be trying to do it through a put option. There’s still a lot of negatives surrounding AFL and I think it’s unwarranted, but it’s allowing for some juicy put premiums.

    Glad to have you on board!

    • AAI, I would have loved to sell a put on AFL, especially with their recent narrow ranged volatility, but because I do not have a margin options account I didn’t have the resources to tie up $5k on the put.

  3. Nice purchase! I think AFL is one of the better buys at the moment. I looked at it a month or two ago; the only thing I didn’t like was some of the bonds in the portfolio. It should be a nice long term holding and has already demonstrated its commitment to raising dividends.

    • I agree CI, they have really been committed to raising their dividends and have a lot more room to do so with the low payout ratio. As you mention, the concern is some of their holdings, but I believe they have been working to decrease their exposure and potential downside in that area.

      Thanks for coming by CI! Big fan of your recent buy of KMI!

  4. Aflac is a great company and if it wasn’t already my largest holding I’d be excited to add more to my position. I think the potential is pretty good going forward for Aflac and hopefully it pays off for both of us!

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