Aflac Loads the Buyback Cannon as New Sales Signal Strength

Aflac Incorporated AFL recently approved a significant expansion of its share repurchase program, adding 100 million shares to the 30.9 million remaining under its previous authorization. This increases the total buyback capacity to approximately 130.9 million shares. Share repurchase programs often indicate management’s confidence in the company’s long-term prospects and valuation.

They also provide a means of returning capital to shareholders alongside dividends. In the second quarter, Aflac repurchased 7.9 million shares worth $829 million and declared a dividend of 58 cents per share. Its dividend yield of 2.24% exceeds the industry average of 2.05%. The company has also achieved 42 consecutive years of dividend hikes last year.

Aflac ended the second quarter with $7 billion in cash and cash equivalents, up 11.8% from year-end 2024. Its total debt-to-capital ratio of 24.7% remains below the industry average of 25%, reflecting strong balance sheet discipline. Continued growth in net investment income, improved margins in the U.S. segment and growing sales in Japan are expected to support its shareholder-friendly initiatives. Adjusted net investment income rose to $1 billion in the second quarter. In the U.S. segment, the year-to-date pre-tax profit margin improved to 21.6% from 21.1% in 2024.

Meanwhile, Aflac Japan delivered an 18.7% year-over-year increase in sales to $236 million in the first half of 2025. Sales momentum of Miraito and new product launches in Japan will likely help in offsetting the negatives in the segment. The progress in digital transformation initiatives will likely play a crucial role in supporting its overall margins.

Other Insurers’ Shareholder-Friendly Efforts

Peers including Aon plc AON and Marsh & McLennan Companies, Inc. MMC are also actively returning capital to shareholders through share repurchase programs and dividends.

Aon bought back 0.7 million Class A ordinary shares for approximately $250 million in the second quarter, leaving about $1.8 billion in repurchase capacity as of June 30, 2025. Meanwhile, Marsh & McLennan bought back 1.4 million shares worth $300 million during the same period. MMC currently offers a dividend yield of 1.76%, while the same for AON stands at 0.82%, below the industry average.

Aflac’s Price Performance, Valuation and Estimates

Shares of AFL have gained 2.2% in the year-to-date period compared with the industry’s growth of 2%.

From a valuation standpoint, Aflac trades at a forward price-to-earnings ratio of 14.91, up from the industry average of 12.14. AFL has a Value Score of D at present.

The Zacks Consensus Estimate for Aflac’s 2025 earnings is pegged at $6.81 per share, implying a 5.6% decline from the year-ago period.

The stock currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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