Ka-Ching! AFLAC just gave me a 6% raise

Another week, another raise... a guy can really get used to this. AFLAC (AFL), the supplemental health and life insurance company, increased its quarterly dividend 6.1% to $0.35 per share. The dividend is payable on December 3, 2012, to shareholders of record at the close of business on November 14, 2012. The yield based on the new payout is 2.8%

Now I'm not one to look a gift horse in the mouth, but I have to admit I'm a little disappointed in the size of this increase. Based on the very low free cash flow payout ratio of 6% and latest quarter's debt to total capital of only 21%, AFL could have easily increased the dividend by double digit percentages.

The company did revise future earnings guidance downwards slightly, but it wasn't by much and their latest earnings was better than expected. In fact, the stock price is still sitting near a 52 week high, so that news wasn't a big deal in the shareholders minds. So why not a bigger increase? My best guess is that management has other intentions for the all that cash. Despite the stock price being near a 52 week high, it still appears severely undervalued so management may be planning a new stock buyback plan. Another possibility is that they are preparing for future acquisitions. Since a large amount of their revenue is generated in Japan, it would make sense for the company to expand its domestic business through acquisition of another company.

Of course, these are just guesses on my part. I'm sure management has a plan and it's in the best interest of the shareholders. It's hard for me to complain about a company that has more than doubled its dividend since 2006. I still think AFL is a great buy at current prices, and unless they give me a reason to sell they will be in my portfolio for a very long time.

Here is a list of other notable companies making their shareholders wealthier:

Company	Industry	Dividend Increase	New Yield
Six Flags Entertainment Corporation (SIX)	General Entertainment	50.0%	6.3%
Access National Corporation (ANCX)	Regional - Mid-Atlantic Banks	33.0%	2.5%
V.F. Corporation (VFC)	Textile - Apparel Clothing	21.0%	2.2%
Peoples Bancorp Inc. (PEBO)	Regional - Midwest Banks	20.0%	2.2%
National Penn Bancshares, Inc. (NPBC)	Regional - Northeast Banks	11.1%	4.7%
Aflac Incorporated (AFL)	Accident & Health Insurance	6.1%	2.8%
Tompkins Financial Corporation (TMP)	Regional - Northeast Banks	5.6%	3.7%
Simon Property Group, Inc. (SPG)	REIT - Retail	4.8%	2.9%
Paychex, Inc. (PAYX)	Staffing & Outsourcing Services	3.1%	4.0%
Met-Pro Corporation (MPR)	Diversified Machinery	2.1%	3.3%
Williams Partners L.P. (WPZ)	MLP - Specialty Chemicals	2.0%	6.0%
Bar Harbor Bankshares (BHB)	Regional - Northeast Banks	1.7%	3.4%
Middlesex Water Company (MSEX)	Water Utilities	1.3%	4.0%

Disclosure: I am long AFL

Related Posts:

Ka-ching! Phillips 66 Just Gave Me a 25% Raise
Ka-ching! Microsoft Just Gave Me a 25% Raise

Another Technology Dividend Stalwart in the Making?

Ka-Ching! Intel Just Gave Me A 7% Raise

TAGS: [SIX] [PEBO] [SPG] [NPBC] [TMP] [AFL] [MSEX] [ANCX] [MPR] [BHB] [PAYX] [WPZ] [VFC]