Saturday, June 14, 2014

10 Reasons why I bought Aflac

I already mentioned earlier that I've opened a position in Aflac. What are my reasons for buying this company? I've got at least 10!
  1. Great business model: getting paid up front (premiums), earn investment income from these premiums (float) and deduct incurred losses. It's simple as that and the insurance industry is here to stay for decades to come.
  2. Sturdy revenue growth. In last decade Aflac has increased revenue 7% per year (CAGR)
  3. Increased profitability. In the same decade, the operating earnings per share grew by 14% per year.
  4. Enough oppurtunities for revenue growth in the future, both in Japan and USA.
  5. Dividend champion: this company has raised dividends for over 31 consecutive years. In the last decade Aflac raised dividends with on average 15% per year. The dividend growth rate has been slightly lower in the last few years however.
  6. Pay-out ratio: Aflac only pays out 21% of its earnings to shareholders. This provides ample safety in the dividend and future increases.
  7. Share repurchases: in the last decade Aflac retires between 1-1.5% of their outstanding shares per year.
  8. Great balance sheet: debt/equity-ratio of only 0.3. Interest coverage ratio of over 16x.
  9. Valuation: with a price/earnings-ratio of 9.5 it is really cheap to purchase shares in such a quality company.
  10. Diversification in my DGI portfolio: before this purchase I had no exposure to any insurance company.
To summarize, I've bought 28 shares @ $61.45 per share. This purchase adds around €30 to my annual forward income. As of now my DGI portfolio will earn €675 per year.

Monday, June 9, 2014

A Dutch Dividend Challenger, Acomo: Slightly Too Expensive Right Now?

Most if not all the Dividend Growth Investors on Seeking Alpha have used the so called CCC-list, maintained by David Fish. On this list are companies which have increased their dividend payout for at least 5 years (challengers), 10 years (contenders) or 25+ years (champions). Even though these companies are American based, a lot of these companies on this list have global exposure. However, in any case, they are still listed on American stock exchanges, valued in American dollars and also pay regular dividends in American dollars. For someone based in other areas of the world (in this case Europe), this poses a risk due to changes in the EUR.USD-rate.

As a DGI I would like to diversify my dividend income stream between companies listed in Europe and the USA. Of course the most important thing is that I want to invest in great companies with solid business fundamentals, good history of earnings and dividends and shareholder friendly management. Acomo is certainly one of them!

Wednesday, June 4, 2014

Monthy Update: May 2014

The month has passed and it's my favorite time, giving an update of my dividend portfolio. I've updated my benchmarks to include the total return indices, instead of only the stockprice indices. This seems like a better comparison.

IndicatorAs of 28-4As of 31-5% change
S&P 500 Total Return3.4003.474+2.2%
Dow Jones Industrials Total Return32.62932.981+1.1%
AEX GR1.1441.178+3.0%
Portfolio value€ 16.506 € 16.899 +2.4%

Sunday, June 1, 2014

What to buy this month?

I've deposited another 1.200 euros to initiate a new position. However, since markets are at all-time highs it's getting harder to find decent valued companies which fit the bill. Right now my watchlist consists of the following stocks: Microsoft, Aflac, Visa and Acomo.