Dividend Aristocrats – or corporations which have persistently raised their dividends for 25 years or extra – are virtually assured secure havens for dividend buyers.
However we all the time need to take a deeper dive to verify their payouts are literally safe.
Aflac Inc. (NYSE: AFL) is a $40 billion insurance coverage firm and a 2.5%-yielding Dividend Aristocrat that has upped its dividend for the final 39 years.
Companies use Aflac to supply workers high-quality advantages. Aflac offers not solely common dental and imaginative and prescient insurance coverage but in addition insurance coverage for most cancers and different life-altering well being occasions.
Like many different corporations, Aflac noticed a hunch after 2020 as a result of many workers dropping their jobs… and subsequently their advantages. Free money circulate has been steadily declining, notably dropping from round $6 billion in 2020 to $5 billion in 2021.
And in 2022, the enterprise continues to be discovering its footing. Free money circulate is at the moment anticipated to return in at $4.49 billion in 2023 – a far cry from the $6 billion posted in 2020.
However not all is doom and gloom for this Dividend Aristocrat.
Like I identified, Aflac has persistently raised its dividend for over three a long time, together with the previous few chaotic years.
On one other word, Aflac is estimated to have a payout ratio of solely 21% this yr. And final yr, its payout ratio was a mere 17%. As a reminder, Security Internet prefers a payout ratio of 75% or decrease.
Aflac’s low payout ratio leaves the corporate with not solely loads of room to develop its dividend but in addition time to get its free money circulate again on observe.
Nonetheless, if Aflac can’t get free money circulate shifting in the proper route, it could go after its dividend first.
All in all, Aflac is conserving its margins so large that we received’t have to fret too a lot a few minimize. However the dividend security is price maintaining a tally of.
Dividend Security Ranking: C
When you have a inventory whose dividend security you’d like analyzed, depart the ticker image within the feedback part.
It’s also possible to examine to see whether or not we’ve written about your favourite inventory not too long ago. Simply click on on the magnifying glass within the higher proper nook of the Rich Retirement homepage and kind the corporate’s identify within the field.
Good investing,
Brittan