Dividend stocks make great long-term investments, providing a steady stream of income that can help offset stock market volatility. In addition, stocks with high dividend yields can provide a nice boost to total returns. Even option income strategies can be used to produce high yields from stocks with low underlying volatility. Below I am going to share with you two great companies for dividends and options premium.
3M and Aflac AFL are two great companies that offer both high dividends and options premiums. Both companies have shown a commitment to shareholder returns and have a history of paying out dividends.
In this article, we will take a look at two great companies for dividend income and options premiums: 3M and Aflac AFL. So if you are looking for high dividend stocks or options income strategies, here are two companies worth considering.
3M
The 3M Company is a large, American company that makes products for many different industries. They work in multiple fields, including healthcare, worker safety, consumer goods, and industrial.
With a market cap of over $80 billion, the company produces over 60,000 products under several brands. Including
- Adhesives
- Laminates
- Passive fire protection
- Personal protective equipment
- Paint protection films
- Dental and orthodontic products
- Car-care products
- Electronic circuits
- And more
The 3M company is in Maplewood, which is a suburb of Saint Paul, Minnesota.
3M is a large company that had $35.4 billion in sales in 2021. They are number 102 on the Fortune 500 list of the largest United States companies. They have 95,000 employees and operations in more than 70 countries as of 2021.
Current stock price
MMM stock has lost a little more than 24% of its value over the previous nine months and more than 27% in the last 12 months, ending at $140 in the last trading session. The share is presently valued at 28.9 percent beneath its 52-week peak of $206.81, which it hit on June 7, 2021.
MMM’s gross profit margin of 46.33% is much higher than the industry average of 29.29%. In addition, its EBITDA margin of 26.77% is more than double the industry average of 13.28%. Furthermore, the company’s EBIT margin of 21.35% is also much higher than the industry
MMM is currently offering a 4.44% dividend yield, which is not bad at all.
Future expectations
MMM’s EPS is expected to rise 13.9% year over year in the third quarter of 2022, according to analysts. According to analysts, its revenue for its fiscal year 2023 is expected to grow by 3.3% from the previous year. This will amount to $37.07 billion in revenue. It surpassed the Street’s EPS expectations in each of the four previous quarters. Its EPS is anticipated to rise at least 6.5% per year over the next five years.
Should you invest?
3M is a diversified company with products that are in high demand, even during economic downturns. It has a long history of paying and increasing dividends, and its dividend yield is currently above 4%. In addition, the company’s stock price is down from its 52-week high, providing a good entry point for investors.
Aflac AFL
Aflac Inc. is an American insurance company that provides supplemental insurance in the United States. The company was founded back in 1955 and is based in Columbus, USA.
Aflac provides a wide range of insurance products, but it is most recognized for its payroll deduction insurance coverage, which pays cash benefits when a policyholder has a covered accident or sickness. The company offers over fifty million people around the world and is one of the largest supplemental insurance companies in the USA.
With a market cap of over $35 billion, Aflac can be a great source of dividend income. The company has a long history of paying and increasing dividends and currently offers a dividend yield of 2.85%.
Current stock price
AFL has a debt-to-equity ratio of 0.2, which indicates it is in good financial shape. The company has seen earnings rise at an annual rate of 14.4% for the past five years, but last year’s earnings were down 7.1%. Analysts, on the other hand, anticipate earnings to improve 18.7% year over year in this quarter.
The trailing twelve months’ return on equity (ROE) is 12.1% for Aflac, which is higher than the industry average of 11.7%. This demonstrates how well Aflac uses investors’ money. The Aflac stock price is currently $55.64, which is surprisingly undervalued. It can go up to $67.37 in the next twelve months, which would be a good return on investment for investors.
Future expectations
Aflac is a great company for dividend income and long-term growth. The company has strong fundamentals, a history of paying and increasing dividends and is currently undervalued. The company has earned $5.27 billion for the quarter ended March 2022. This indicates that Aflac is a stable and reliable company to invest in.
Should you invest?
Aflac has an excellent Value Score of A. The Value Score metric is used to spot stocks that are undervalued. When applied with a strong Zacks Rank, stocks with a good Value Score have shown to be the best investment possibilities.
Aflac has an excellent earnings surprise track record, with the bottom-line surpassing forecasts in each of the previous four quarters, with an average surprise of 18.20%. Right now, the stock seems undervalued with a forward P/E of 10.68.
This makes Aflac a good investment for dividend income and long-term growth. Investors who want to invest in the finance sector can consider buying Aflac stock. Since the stocks are currently undervalued, this makes for a good entry point.
Final thoughts
Both MMM and Aflac offer investors a good combination of dividend income and long-term growth potential. MMM is a diversified company with products that are in high demand, even during economic downturns. On the other hand, we have Aflac, which has great growth potential making it a good choice for investors.
Both of these companies are optionable and you can earn good premiums selling both puts and calls on them. You can actually use the options wheel strategy to vastly increase your returns both before owning them and after they have become a part of your portfolio. If you would like to learn more about how selling options work, we have a post that can help. Getting Started Investing With Options -Beginning From Ground Zero
As a rule of thumb for investing, make sure to do your research, understand the risks and potential rewards, and then decide based on your investment goals. Good luck!
Thanks for taking the time to read my post!
Uncle Jim
