Aflac Incorporated (NYSE:AFL) has built an impressive dividend track record over the years. It has raised its dividend for 43 straight years, leaving the company just seven increases away from becoming a Dividend King, a milestone that requires 50 consecutive years of dividend growth.
The company raised its quarterly dividend by 5.2% in early 2026 to $0.61 per share. That was well below the 16% increase announced in 2025, but it still showed that management remains committed to steadily growing the payout.
For income investors, the bigger question is whether Aflac can keep the streak alive for another seven years.
Photo by Scott Graham on Unsplash
The Bull Case
Aflac Incorporated (NYSE:AFL) has a few important factors working in its favor. One of the biggest positives is the strength of Aflac’s business model. The company focuses on supplemental insurance, including coverage that provides cash benefits after events such as a cancer diagnosis. Customers pay premiums before claims are made, giving Aflac capital it can invest in the meantime. That model has helped the company generate steady profits and return money to shareholders for decades.
The second quarter was a mixed bag, but the numbers still point to a financially solid business. Aflac reported $4.1 billion in revenue, down 1% from a year earlier. Net earnings jumped 37.7% to $825 million, or $1.63 per diluted share, partly because of lower investment losses. Adjusted earnings came in at $883 million, while adjusted EPS was $1.75, down 1.7% from $1.78 a year earlier. Looking at the first six months, adjusted EPS increased 4.1% year over year when excluding currency changes. Aflac also posted a 16.6% adjusted return on equity excluding foreign currency remeasurement.
Aflac Incorporated (NYSE:AFL) is also returning a significant amount of cash to shareholders. It returned $1.3 billion in the second quarter, including $983 million through share repurchases and $309 million in dividends. Buybacks can support future dividend growth because a smaller share count means the company needs less cash to maintain and increase its per-share dividend.
Management has also made its dividend priorities clear. Aflac intends to keep extending its record of annual increases while balancing investment in the business with shareholder returns.
Taken together, these factors make a good case for continued dividend growth. Aflac does not need explosive earnings growth to keep raising its payout. Consistent profits, a strong balance sheet, and disciplined capital allocation should be enough, and the company has shown it can deliver on those fronts.
The Bear Case
The biggest concern is Aflac Incorporated (NYSE:AFL)’s significant exposure to Japan. Aflac generated about $4.1 billion in revenue during the second quarter, with roughly $1.5 billion coming from Japan. More importantly, Japan contributed about two-thirds of the company’s pretax adjusted earnings. That makes the Japanese operation a major driver of Aflac’s overall results.
That exposure also makes currency movements important. Changes in the yen-dollar exchange rate can have a meaningful impact on reported results and make earnings harder to predict. Currency swings do not necessarily put the dividend in danger, but they can make the company’s growth look weaker from one quarter to the next.
The second quarter also showed that earnings growth will not always be smooth. Adjusted earnings fell 7.7% to $883 million, while adjusted EPS declined 1.7% to $1.75. A stronger US dollar and weaker performance in Japan weighed on the numbers. For the first six months, adjusted earnings were down 2.4% excluding currency changes, while adjusted net investment income fell 4.3%. The dividend still looks well supported, but investors should expect some ups and downs in earnings.
Dividend growth itself is another point to consider. The 5.2% increase is solid, but it was much smaller than the 16% hike in 2025 and the 19% increase in 2024. Investors should probably not count on double-digit dividend growth every year. A more realistic expectation is mid-single-digit growth backed by earnings, capital generation and share repurchases.
Conclusion
Aflac Incorporated (NYSE:AFL)’s dividend looks capable of continuing to grow, although the pace is likely to be more moderate than it was in some recent years. Strong capital generation, buybacks, and its long dividend history give the payout a solid foundation. The second-quarter results also show that the business remains profitable despite some pressure on earnings.
The main risk is Aflac’s heavy exposure to Japan, which can add currency and earnings volatility. At this point, those issues do not appear serious enough to threaten the dividend streak. With seven more increases needed to reach 50 years, Aflac has a realistic shot at becoming a Dividend King. For investors looking for dependable dividend growth rather than a high starting yield, Aflac remains an appealing income stock.
While we acknowledge the risk and potential of AFL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AFL and that has 10,000% upside potential, check out our report about this cheapest AI stock.
READ NEXT: Automatic Data Processing (ADP) Dividend Outlook: Strong Fundamentals, Modest Yield and McDonald’s is One Dividend Hike Away from Becoming a Dividend King
Disclosure: None. Follow Insider Monkey on Google News.
Hedge Fund Resource Center