First up is $22 billion supplemental health insurer Aflac (AFL). Aflac is one of the biggest supplemental coverage firms in the world, with operations in the U.S. and Japanese markets.
Right now, it pays out a 33-cent dividend to shareholders each quarter, a payout that works out to a 2.87% yield. But I think there's room for Aflac's payout to grow in 2012.>>5 Financial Stocks Hedge Funds Love Aflac is probably best known here at home for its popular ads that feature an unlucky cartoon duck. But AFL's customer risks look a whole lot better than their mascot would imply. The firm's policies pay out predetermined cash benefits if customers meet a predetermined condition -- normally contracting a disease or being involved in an accident. These sorts of loss-of-income policies are proving popular in the wake of the Great Recession as consumers look for way to protect income. And since they're deducted directly from paychecks in many cases, there's no sticker shock effect from seeing money go out each month. The vast majority (around three-fourths) of Aflac's business is Japan. The company's Japanese customers are historically stickier than U.S. consumers, and high demand for supplemental insurance products has helped create substantial growth -- and impressive cash generation. Low debt and ample balance sheet liquidity should make Aflac a prime candidate for a dividend hike in 2012.
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