I decided to make another move in this turbulent market. I can predict the future as well as the next guy…that is another way of saying I can’t. I don’t know if know is a great time to invest, but I do know that cash in the bank is a horrible investment. The more money I have working for me, and the larger my passive income stream grows the faster I can compound my growth. That’s what it’s all about for me.
I recently asked my readers what were they buying? A lot of readers seemed pretty keen on Aflac, Intel and a couple telecoms as well. As I’ve said a few times before, I like to walk the walk when I talk the talk. I don’t post endless articles on this blog for pointless and endless reference. I rarely suffer from analysis paralysis. I share ideas with my readers and I engage an idea when I feel the time is appropriate.
On that note, I purchased 42 shares of Aflac Incorporated (AFL) for $34.74 a share on 9/9/11. I’ve listed reasons for my interest in Aflac quite a few times before. Aflac provides supplemental health and life insurance in the U.S. and Japan. Interestingly, approximately 80% of their earnings come from Japan. If you’re looking for international exposure, this is it. I think it’s a solid business that’s facing headwinds just like a lot of companies are right now. They have some risky investments on the books right now including sovereign debt from some European nations. For anyone interested, you can view their investments here:
I think, overall, the solid market share, dividend increases and likely manageable claims from the Japanese earthquake make the current price very attractive. I believe the current market price has more than factored in some of the headwinds they face. They have a historically high yield at this time. My entry yield on purchase is 3.45%, which is pretty solid in my opinion. It will provide me with a yearly dividend of $50.40 based on the current payout. Financial stocks are risky right now, and I’m staying away from banks at the moment. I think insurance companies are pretty solid, however, and provide a lot of value since they fall under the financial sector umbrella. Overall, I’m pretty happy with this purchase.
As a side note, this was a tough decision. I ALMOST purchased Intel. I’m bullish on both and INTC may be a near-future purchase. We’ll see.
S&P currently rates AFL a 4-star BUY with a 12-month target price of $42.00. Morningstar currently rates AFL as a 4-star value.
What do you think?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net
Nice entry point DM! I bought AFL around $46, near it’s previous 52 week low. But it’s okay, I can always dollar cost average. Also, I think the next dividend date will have an increase!
Henry,
Thanks. I always felt that AFL was a pretty decent buy in the $45 range. So, I easily could have joined you as a shareholder in that price range.
You’re right…DCA is the name of the game. Average down and lower your cost basis.
The next dividend will likely be higher as the last dividend of the year is when the raise comes in. That means my entry yield is actually higher, technically.
This seems like a pretty solid investment all being considered.
Good luck to you as a fellow shareholder.
Take care.
Mantra,
I like AFL quite a bit actually. It’s fun to watch their new marketing commercials since they dumped Gilbert Gottfried (following some insensitive remarks about the recent Japanese tsunami). If you haven’t seen them yet, the recent ones are hilarious.
I am gearing up for a purchase on the 15th and will be blogging about it on my site. It’s an infrastructure play…
Another great post!
Income Pirate
Buying when others are wary has been one of my most profitable strategies! The last time I did this was after the flash crash. Most of my buys are still in the green!
Good move DM!
Hi Dividend Mantra,
It always feels great when you buy a new position; congrats.
Although I’m not overly familiar with ATF, it sounds as though you’ve been able to buy a position in a company that offers some solid foreign content exposure. With 80% of the company’s earnings stemming from Japan, you have effectively gained international exposure through a domestic purchase.
Good stuff!
@Dividend Mantra: Oops, my bad; I meant to say AFL and not ATF
Pirate,
I look forward to seeing what your purchase is!
I have seen the new commercials. I guess they actually had a huge contest where they chose the next voice for the duck. Good stuff!
MoneyCone,
Be greedy when others are fearful….
TWC,
It’s always nice to receive foreign exposure through a domestic purchase. Of course, this could be also said for quite a few of the large U.S. multinationals like JNJ and KO. We’ll see how it goes.
Thanks for stopping by!
Good man. You done good. This will hopefully be a great motor in your dividend growth engine. Congrats on a solid buy.
JF
Nice work, buddy. I just added to my AFL position over the last week when it hit $33.50 and just reinvested a $40 dividend this past quarter. Feels good!
Insurance companies, inherently, make money. If they’re not making money, they raise their premiums and start making money. It’s a pretty solid business model and they’re even able to invest the money they take in from policy holders to make even more money.
Glad to welcome you to the AFL family!
I averaged down on TEF, buying 1000 shares at 18.37 and another 1000 shares at 17.35. I had an original 1000 shares purchased at 21.50.
TEF is going to be a long term holding for me… it’s a cash machine!
Relic Obscura,
Is that you, Joe? Long time, no talk. It’s good to hear from you!
Thanks for stopping by and thanks also for the encouragement. I think AFL was just such a screaming buy I couldn’t pass it up. You are also long AFL if I remember correctly, no?
Take care. 🙂
Pey,
Thanks! You got in at a great price there! I don’t see it going any lower than where you bought in at. At that point, you have very limited downside and almost unlimited upside. Plus, you get a pretty solid yield while you wait. Can’t lose!
You nailed it on the head there. The float is a wonderful thing. Insurance companies make money with our money, raise our rates when we make a claim and then try to fight us when we have a legitimate loss. It’s really an unbelievable business model, as you touch on.
I’m glad to be a part of the Aflac family!
Anonymous,
I’m long on TEF as well and averaged down twice after my initial purchase. I would gladly purchase at these levels if I didn’t already have a substantial (for my portfolio size) holding.
You have quite a bit of money invested with TEF. I think it’s undervalued at current prices with a monster yield that is fully covered. The issue I have is with the relatively large debt to equity ratio and interest coverage ratio. Are you concerned about the debt load and ability to pay it going forward? I like the fact that they are growing in Latin America and people don’t stop using their phone in a recession, but the debt load is concerning. I have been thinking about adding to my holdings as TEF is currently SO FAR BELOW my cost basis.
Of course, I also like so many other equities right now. As I always say…so many equities, so little money.
Thanks in advance!
Tis I, tis I…All is well, great to follow you on your journey, keep up the good work!
Yes, I’m quite long AFL, indeed…A good part of a diversified dividend growth portfolio, I wager.
Joe
Joe,
Glad to hear all is well. I hope all your investments are doing fantastic!
I would wager the same as you. Tremendous growth in both earnings and dividends, and even with that growth slowing a bit, I still think it’s a solid value play right now with a historically high yield.
Always good to talk to you.
Take care!