Aflac (AFL) Rewards Shareholders with an Annual Dividend Increase
We may earn money or products from the companies mentioned in this post.
Our family just got a raise. It wasn’t a big raise and it wasn’t from my full-time job.
It was actually from a dividend increase we received from a company that we own shares in. Even though the raise was small, we like to celebrate every increase to our income that we receive. Just this year, we have been rewarded with over 20 dividend increases from our stock portfolio!
Collectively, these increases to our income add up over the year. And most of the time, they compound year after year.
The most recent dividend increase from a stock we own was from Aflac (AFL).
AFL Shareholders Get a 4.65% Raise
Aflac (AFL) recently announced an annual dividend increase. The company has been consistently raising dividends for the past 34+ years.
Company shareholders will now receive $0.45 in quarterly dividends for each share they own … instead of $0.43 paid previously. This does not quite meet our desired dividend growth rate of over 6%.
The latest increase bumps the annual dividend for AFL up to $1.80 per share compared to $1.72 just last quarter.
Overall, that is a 4.65% increase in dividend income!
While not a 6% hike (or more), Aflac still gave shareholders a raise that will beat inflation.
How Much Extra Income?
We currently only own 61.187 shares of AFL in our Money Sprout Index.
We purchased these shares (and earned DRiP shares) over the course of 5+ years through both our Fidelity and Robinhood accounts. Aflac has been one of our most consistent dividend paying stocks and is a well established building block of our portfolio.
This latest dividend increase has pushed our 12 month forward dividend income for AFL up to $110.14, compared to $105.24 last quarter.
That is an annual dividend income increase of $4.89! Certainly not the highest increase we have ever received, but still amazing growth when you think about it.
Whether they are large or small, all of these increases can really add up over the months and years.
With this latest increase by Aflac, along with recent stock purchases, dividend reinvestment, and other company announced increases … our annualized forward dividend income has risen to $2,780.89.
Dividend Growth for AFL
We have owned shares of Aflac (AFL) for over 5.5 years now. Our first purchase was a lump sum investment of 14 shares back in 2012. We have been slowly adding shares through our Robinhood account for the past couple of years and adding DRiP shares through Fidelity.
As mentioned earlier, the company has been raising dividends for the past 34+ years. And the dividend growth during that time has done very well.
Take a look at the annual dividend payments since 2012 –
- 2012 – $1.34
- 2013 – $1.42
- 2014 – $1.48
- 2015 – $1.58
- 2016 – $1.66
- 2017 – $1.74 (projected)
Note – The 2017 dividend has been prorated to reflect a dividend increase during the year (after the third quarter payout).
As you can tell from the numbers above, AFL dividends have been raised consistently by 4% to 5% or more over the past several years … which has been great for dividend investors.
Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher. Aflac doesn’t hit that target but has been consistent in their raises … which is also something we look for and let’s us sleep at night.
Here are a few average growth rates for shares of Aflac –
- 1 Year DGR – 4.82% (2016 to 2017)
- 3 Year DGR – 5.55% (2014 to 2017)
- 5 Year DGR – 5.37% (2012 to 2017)
Aflac – Buy, Sell, or Hold?
We started buying shares of Aflac (AFL) back in January 2012 when we purchased 14 shares at $47.78 per share through Fidelity. Then in 2015, we started adding a few shares here and there through our Robinhood account. It is important to point out that we did not pay any commissions or fee’s for these small trades in our Robinhood account.
Since buying our first shares back in 2012, we have earned $229.09 in dividends from Aflac. All of those dividends received in our Fidelity account have reinvested back into an additional 2.187 shares through DRiP. All dividends earned in our Robinhood account have been reinvested back into shares of various stocks.
Here are a few stats from owning stock in Aflac –
- Total Investment – $3,727.34
- Shares Purchased – 59.000
- Dividends Earned – $229.09
- DRiP Shares – 2.187
To date, we have earned back 6.15% of our overall investment in the company … just from dividends.
We are also currently earning a 2.95% yield on cost on our shares of AFL.
While owning shares of Aflac over the past 5+ years has been good … it doesn’t necessarily mean we are buying new shares.
At the time of this writing, AFL meets SOME of our stock screen criteria based on the following metrics –
- Current Yield – 2.11%
- Payout Ratio – 25.98%
- P/E Ratio – 12.29
The company meets some of the criteria that we look for when picking stocks. For example, the company does have a current yield >= 2%, a payout ratio under 60%, and a PE under 20.
However the 5-yr dividend growth rate is slightly under 6%, plus the company already makes up 4% of our portfolio. We feel there are better dividend growth opportunities out there at this time.
Note – If I were just starting out building a dividend income portfolio, I would likely give strong consideration to adding AFL.
Based on all of this, we have AFL as a solid HOLD for now. If the company were to ever announce a dividend cut … then we would sell all of our shares in the company, although that doesn’t look like it would happen for some time.
For now … we hold our shares and will continue to collect $100+ a year from the company!
Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – AFL. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.