September 7, 2020

Aflac: Buy This Undervalued, Accidently High Yielder

 

Even after a 64% rally off of its March lows, Aflac still offers a valuation and yield that compare very favorably to its historical averages

  


Whenever the market has a temper tantrum and decides to sell everything, it often throws out good stocks along with the bad. This can lead to a situation where the dividend yield is considerably higher than usual. This is what investors refer to as an accidently high yielder.

 

One excellent example of this is Aflac Inc. (NYSE:AFL). Shares of Aflac sold off along with the rest of the market in March as the Covid-19 pandemic spooked the market and resulted in dramatic selloffs in nearly every industry. Shares of Aflac have recovered somewhat from the lows, but the stock sits more than 30% off of the 52-week high.

 

While making a new 52-week high might not occur for sometime due to the uncertainty that remains in the market, Aflac's current yield is more than 50 basis points above its 10-year average.

 

This may not sound like much, but the share price would have to increase more than 20% in order for the stock to trade with its 10-year average dividend yield.

 

 

 

 

Shares of the company also trade below the long-term average. This could be a great opportunity for investors to acquire shares of an undervalued stock offering a higher than usual dividend yield.

 

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