Aflac Has Raised Its Dividend for 43 Straight Years. Here's the Catch Income Investors Need to Watch.
2026-07-22 02:15
•Reuben Gregg Brewer •The Motley Fool
••••• • Axe Capital view
Dividend Reliability Meets Currency Risks: Lessons from Aflac
Aflac’s long dividend streak comes with a currency risk twist that South African investors should note.
Aflac’s 43 years of annual dividend raises is undeniably impressive, showing a commitment to returning cash to shareholders. But the catch is Japan. Over two-thirds of its pre-tax profits come from there, so fluctuations in the dollar-yen exchange rate can swing earnings—and dividends—meaningfully. For South African investors, this is a cautionary tale about how currency exposure can quietly undermine otherwise reliable income streams. Unlike tech giants on the JSE, Aflac’s earnings hinge on a forex cross we don’t trade actively (USD/JPY), but the principle applies here at home. Our rand's twists versus the dollar can similarly disrupt companies like Naspers and Prosus, whose earnings rely on global revenues. Aflac counters currency drag with hefty share buybacks, but that’s a luxury local companies often can’t afford. Watch the USD/ZAR too, since foreign earnings exposure isn’t rare in SA stocks. If the rand weakens, foreign profits translate into rand gains, but the reverse is true too. This gets complex fast. I’m cautious—not bearish, but firmly selective. this is just my opinion and not financial advice
I’d watch Naspers and Prosus carefully for currency-driven earnings volatility; hold positions but trim if the rand strengthens too much, as that could pressure local currency earnings. Stay mindful on USD/ZAR swings as a barometer for this risk.
- USD/ZAR
- Naspers
- Prosus
- currency fluctuations impacting foreign earnings
- market reaction to sharp rand moves
6/10
Aflac has maintained a 43-year streak of dividend increases, with the latest hike at 5.2%. However, investors should be aware that the company derives over two-thirds of its pre-tax earnings from Japan, making it heavily exposed to currency fluctuations between the U.S. dollar and Japanese yen. While the company has managed this risk well historically through aggressive stock buybacks, currency movements could materially impact financial results.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Reuben Gregg Brewer
Categories: Equities, Earnings, Capital Returns, Forex, Financials
Tickers: AFL
Sentiment: Neutral - While Aflac demonstrates impressive dividend growth consistency (43-year streak) and a solid 5.2% recent increase, the article highlights a significant structural risk: over two-thirds of pre-tax earnings come from Japan, creating material exposure to USD/JPY currency fluctuations. This geographic concentration is presented as a notable concern that requires monitoring, offsetting the positive dividend narrative. The company's strong historical management of this risk prevents a negative rating, but the identified risk prevents a positive one.
Keywords: dividend growth, supplemental insurance, geographic concentration, currency risk, Japan exposure, stock buybacks, earnings
Insights:
- AFL: Neutral: While Aflac demonstrates impressive dividend growth consistency (43-year streak) and a solid 5.2% recent increase, the article highlights a significant structural risk: over two-thirds of pre-tax earnings come from Japan, creating material exposure to USD/JPY currency fluctuations. This geographic concentration is presented as a notable concern that requires monitoring, offsetting the positive dividend narrative. The company's strong historical management of this risk prevents a negative rating, but the identified risk prevents a positive one.