Time for a Performance Check
For some background on the idea behind the Performance Check, and the XIRR function used for the calculations, please see my first post in this series – Performance Check – PG
I’m continuing my performance check series with a look at the third dividend paying stock I ever purchased for my Portfolio. The stock is Aflac (AFL), which is part of the Financial sector.
From the company’s website…. “Aflac is the number one provider of individual voluntary insurance products at the worksite in the United States and protects one in four households in Japan. When a policyholder gets sick or hurt, Aflac pays cash benefits fast, giving policyholders the opportunity to direct cash where it’s needed most when a specific health event or life situation causes financial challenges. This is often due to income loss from missed work as well as asset loss from many medical and non-medical out-of-pocket expenses that often arise.” Aflac was founded in 1955, is a Fortune 500 company, and insures more than 50 million people worldwide.
AFL has a long history of increasing its dividend, having done so for the past 34 years, including an annual increase announced last month of 4.65%.
Like my PG & RPM positions, my AFL position is one I initiated many years ago. Thus, I have lots of data/time to factor into the return calculated in this Performance Check.
My Personal Performance for AFL
My initial purchase of AFL came in the spring of 1996 in a Dividend Reinvestment Plan, or DRiP, that I opened at the same time.
Below is a capture of the spreadsheet I keep with the AFL cash flows, and the calculated XIRR. Once again, the table is a bit long for this post due to all the entries, so I broke it up into 2 pieces, duplicating the header each time.
Here are some notes with regard to the ‘Type’ column entries:
OCP = Optional Cash Purchase; EOY Value = End Of Year Value
Note – the prices reflect a pair of 2:1 stock splits that has occurred since my initial investment.
The duplicate EOY Value entries at the end of each year (one negative, one positive) do not affect the cash flow, and can be thought of as boundary markers, allowing me to make the individual yearly return, and the annualized total return calculations.
You’ll notice there has been only one withdrawal over the 21+ years I’ve had AFL. This came in 2016 when I had to sell the fractional shares as a result of closing my DRiP account and transferring the shares to my brokerage account (I was only allowed to transfer whole shares).
Otherwise, it’s been only small OCPs here and there… usually $50 or $100, and a max contribution of $250. My last OCP was in 2011. Thus, the reinvested dividends have been doing the majority of the work.
The net investment into AFL over the years has been $1,485.23. This is not my cost basis though, as this net investment does not include reinvested dividends. Reinvested dividends has been $1,672.51. Thus, I’ve had a 112.61% payback of my net investment!
Meanwhile, the current value is $10,360.74.
The annualized total return ends up being 12.73%, covering my initial purchase on 5/6/1996, all the way to 11/10/2017.
As with PG & RPM, my investment timeframe for AFL includes two significant bear markets.
AFL’s price performance this year has been great, exceeding that of the market. Also, I can’t argue with the long-term track record.
My 12.73% annualized return for AFL easily exceeds my desired target return of 9% to 11%.
This performance is also better than the reported 9.41% and 10.79% returns for my Procter & Gamble (PG) and RPM International (RPM) positions that I reviewed in my previous two performance checks. Bringing the returns of PG and RPM up-to-date allows for the following comparison.
This is the 3rd of at least 5 performance checks that I’ll be doing in the next few months. Let me know if you have any questions about what you see in the spreadsheet snips.
Do you have similar performance checks for stocks in your portfolio? If so, please share some of your annualized return numbers! Let me know what criteria you have for acceptable performance.