The board of Aflac Incorporated (NYSE:AFL) has announced that it will be paying its dividend of $0.58 on the 3rd of March, an increased payment from last year’s comparable dividend. This makes the dividend yield about the same as the industry average at 2.2%.

View our latest analysis for Aflac

Unless the payments are sustainable, the dividend yield doesn’t mean too much. However, prior to this announcement, Aflac’s dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 12.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.74 in 2015 to the most recent total annual payment of $2.32. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven’t experienced any notable falls during this period.

Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. Aflac has seen EPS rising for the last five years, at 11% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Aflac’s prospects of growing its dividend payments in the future.

Overall, a dividend increase is always good, and we think that Aflac is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we’ve picked out 1 warning sign for Aflac that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.