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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