08-16-2013, 09:06 AM
I would like to revisit this discussion of Aflac.
I've been reading up on it and just as Kerim mentioned in the original post above, it looks like a great company in many ways. Moreover, even though you could have had it for less per share not so long ago, at today's prices it still seems like a value -- perhaps even still very undervalued.
But I am a dividend growth investor, not a straight value / growth investor. And it looks to me like Aflac is pretty darned stingy with the dividends and the dividend growth. A purchase today gets you an underwhelming initial yield of 2.3 or 2.4 percent or so. Even if they continue to grow the dividend at 8 or 9 percent, which they've been doing for the last few years since the 2008-2009 turmoil, the payout from AFL is going to be on the light side for the foreseeable future. With strong earnings and a very low payout ratio (around 20 percent), they could certainly be a bit more generous with the dividend.
So the question I'd love to hear opinions on is what good is an excellent stock like AFL to a dividend growth investor if they are weak on the dividend payout and dividend growth part of the equation? Should I just be content that the strong company performance makes the dividend "safe"? Should I compromise and in this case hope for a good portion of my return to be in the form of share price appreciation? But share price appreciation does little for the income stream I am nurturing and growing -- that's why I am a DG investor and not a growth investor in the first place.
Sorry to rant. Would love to hear thoughts about AFL and the general questions I've raised.
Tom
I've been reading up on it and just as Kerim mentioned in the original post above, it looks like a great company in many ways. Moreover, even though you could have had it for less per share not so long ago, at today's prices it still seems like a value -- perhaps even still very undervalued.
But I am a dividend growth investor, not a straight value / growth investor. And it looks to me like Aflac is pretty darned stingy with the dividends and the dividend growth. A purchase today gets you an underwhelming initial yield of 2.3 or 2.4 percent or so. Even if they continue to grow the dividend at 8 or 9 percent, which they've been doing for the last few years since the 2008-2009 turmoil, the payout from AFL is going to be on the light side for the foreseeable future. With strong earnings and a very low payout ratio (around 20 percent), they could certainly be a bit more generous with the dividend.
So the question I'd love to hear opinions on is what good is an excellent stock like AFL to a dividend growth investor if they are weak on the dividend payout and dividend growth part of the equation? Should I just be content that the strong company performance makes the dividend "safe"? Should I compromise and in this case hope for a good portion of my return to be in the form of share price appreciation? But share price appreciation does little for the income stream I am nurturing and growing -- that's why I am a DG investor and not a growth investor in the first place.
Sorry to rant. Would love to hear thoughts about AFL and the general questions I've raised.
Tom