06-23-2013, 01:25 PM
Aflac is one of the highest-rated stocks on my watch list. It scores high on almost every metric that I care about, and yet I still have trouble pulling the trigger on more shares. It has a nice low p/e, a very safe payout ratio, very nice earnings growth, and reasonable dividend growth. I am comfortable with the business model and confident in the management, and there is certainly room in my portfolio for more financial / insurance stocks.
I think my two big problems with it are not so rational, but still they hold me back. The first is that the shares I do own I got at an average price of $44.68. So it is just psychologically hard to buy it in the mid-$50s with a yield around 2.5 percent. My second problem is the yield. Buying shares right now gets you an initial yield of right about 2.5 percent. That isn't too shabby really, but it also just isn't exciting at all. I prefer starting yields of 3 percent or above, and the shares of AFL that I do own I have an initial yield of 2.96 percent and a yield on cost of 3.14 percent. Those numbers make today's 2.5 percent all the less appealing. Buying new shares today will blow my averages with AFL!
All that said, I realize that these are not rational reasons to avoid buying at today's prices. Especially since, as I mentioned at the start, it is the second-highest rated stock on my list.
What do you guys think?
I think my two big problems with it are not so rational, but still they hold me back. The first is that the shares I do own I got at an average price of $44.68. So it is just psychologically hard to buy it in the mid-$50s with a yield around 2.5 percent. My second problem is the yield. Buying shares right now gets you an initial yield of right about 2.5 percent. That isn't too shabby really, but it also just isn't exciting at all. I prefer starting yields of 3 percent or above, and the shares of AFL that I do own I have an initial yield of 2.96 percent and a yield on cost of 3.14 percent. Those numbers make today's 2.5 percent all the less appealing. Buying new shares today will blow my averages with AFL!
All that said, I realize that these are not rational reasons to avoid buying at today's prices. Especially since, as I mentioned at the start, it is the second-highest rated stock on my list.
What do you guys think?