Dividend Increase, Volatility Crush Puts Aflac Stock in Focus

AFL has chart support in place

facebook twitter linkedin


Insurance company Aflac Incorporated (NYSE: AFL) kicked off the month with a solid fourth-quarter report. On February 3, Aflac highlighted increases in revenue and net earnings. The company reported net earnings of $951 million, or $1.35 per diluted share, compared to $782 million, or $1.06 per diluted share year-over-year. However, that resulted in  a post-earnings lower by 0.3%.  

Aflac did just declare a quarterly dividend of $0.33 per share, marking an increase of 17.9%. The dividend is payable on March 1 to shareholders of record at the close of business on February 17. The new dividend hike brings Aflac’s forward dividend up to $1.32 and its dividend yield to 2.85%.

On the charts, Aflac stock has spent the last three months consolidating below $48. The good news is the shares' 50-day moving average has contained any pullbacks, and AFL is up 4% in 2021. The bad news is that a rally won't come from a short squeeze, considering a slim 1.2% of the stock's total available float is sold short.

AFL stock chart

With earnings out of the way, a volatility crush means it's a prime time to buy premium on the equity's near-term options. AFL's Schaeffer's Volatility Index (SVI) of 23% ranks in the 8th annual percentile, meaning short-term options are relatively cheap, from a volatility perspective.

Overall, Aflac is solid investment option for long-term investors. AFL comes with a reliable dividend that tracks back to 1992 and has grown significantly in recent years. Aflac stock also offers an exceptionally low price-earnings ratio of 6.67, which provides plenty of room for it to appreciate over the coming years. Although its growth is limited, the company has also maintained steady revenue growth. In addition, Aflac has grown its net income by roughly $1.8 billion since 2018. The biggest red flag from a fundamental perspective with Aflac is the $7.9 billion in debt it holds on its balance sheet.

JUST RELEASED: The Complete Guide to Earnings Season Profits

earn21cover"/>

 




 
Special Offers from Schaeffer's Trading Partners