Whether you invest in stocks, bonds, ETFs, or other securities, seeing your portfolio grow is always exciting. For income investors, the focus is on generating consistent cash flow from liquid investments. Dividends play a key role in this strategy, as they are distributions of a company’s earnings paid out to shareholders. Many studies show that dividends contribute significantly to long-term returns.
One company that income investors may be interested in is Aflac (AFL), a Finance stock with a price change of 7.87% so far this year. Aflac currently pays a dividend of $0.5 per share, resulting in a dividend yield of 2.25%. Comparatively, the Insurance – Accident and Health industry’s yield is 2.3%, while the S&P 500’s yield is 1.61%.
Aflac has a strong history of dividend growth, with the current annualized dividend of $2 representing a 19% increase from last year. The company has raised its dividend 5 times in the last 5 years, with an average annual increase of 13.75%. Future dividend growth will depend on earnings growth and payout ratio. Aflac’s current payout ratio is 32%, indicating that it pays out 32% of its earnings per share as dividends.
Earnings growth for Aflac looks promising for this fiscal year, with the Zacks Consensus Estimate for 2024 at $6.46 per share, a 3.69% increase from the previous year.
Dividends offer various benefits to investors, such as improving stock investing profits, reducing portfolio risk, and providing tax advantages. While high-yielding stocks can be appealing, they may struggle during periods of rising interest rates. Aflac presents a compelling investment opportunity as a strong dividend play and currently holds a Zacks Rank of 3 (Hold).
For the latest recommendations from Zacks Investment Research, consider downloading their report on the 7 Best Stocks for the Next 30 Days. Aflac Incorporated (AFL) offers free stock analysis reports. This article can also be found on Zacks.com.