Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on high-quality dividend stocks and assets that provide long-term growth potential, which can significantly contribute to income generation [1]. - The strategy aims to create a balanced portfolio that captures total returns on par with the S&P 500, indicating a robust performance benchmark [1].

Core Viewpoint - Aflac (AFL) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, indicating a positive outlook for the company's stock price [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of a company's shares, leading to significant buying or selling actions that affect stock prices [4]. Aflac's Earnings Outlook - Aflac's rising earnings estimates and the Zacks rating upgrade suggest an improvement in the company's underlying business, which is expected to drive the stock price higher [5][10]. - The Zacks Consensus Estimate for Aflac indicates an expected earnings per share of $6.83 for the fiscal year ending December 2025, with a 1.4% increase in estimates over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - Aflac's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Insights - The 2025 Aflac Time Away Study reveals that nearly 75% of employees experience workplace stress or anxiety when covering for a peer on leave, highlighting the significant challenges faced during these periods [1][5][6] - The study emphasizes the need for proactive leave management practices to mitigate burnout and maintain employee morale, urging employers to adopt a holistic approach to leave management [2][3] Employee Well-Being and Productivity - 41% of employees reported experiencing burnout when a co-worker's leave extended beyond eight weeks, indicating a direct correlation between extended leave and employee stress levels [2][5] - Mental well-being dropped by 11 percentage points for employees covering for peers, showcasing the mental health impact of increased workloads [5] - 73% of employees experienced at least moderate workplace stress or anxiety while covering for a peer, underscoring the need for effective support systems [5] Health Impacts - 27% of employees diagnosed with a new health condition during or after their coverage period attributed it to the increased workload, indicating a significant health risk associated with covering for absent colleagues [5] - 18% of workers reported that a preexisting condition worsened while covering for a peer, further illustrating the health implications of additional responsibilities [5] Recognition and Support - 29% of employees stated they did not receive any recognition for their additional work, despite 95% of leaders claiming access to recognition tools, highlighting a gap in acknowledgment of employee efforts [5] - Employers are encouraged to implement strategies that include clear communication, regular check-ins, and support tools to prevent burnout and enhance employee engagement [3][4] Recommendations for Employers - Aflac suggests that employers should create robust leave contingency plans that foster a culture of communication, recognition, and support to minimize the negative impacts identified in the study [3][4] - The study calls for leaders to be aware of the toll that longer leave coverage takes on employees, particularly tenured staff who may seem better equipped to handle increased workloads [4]

Group 1 - Loews, AFLAC, and Marketaxess Holdings will trade ex-dividend on 8/20/25, with respective dividends of $0.0625, $0.58, and $0.76 to be paid on 9/2/25 and 9/3/25 [1][2] - The expected price adjustments for the stocks are approximately 0.07% lower for Loews, 0.55% lower for AFLAC, and 0.40% lower for Marketaxess Holdings when they open for trading [2] - Marketaxess Holdings is a contender for the "Dividend Aristocrats" index, having over 16 years of dividend increases [3] Group 2 - The estimated annualized yields based on the most recent dividends are 0.26% for Loews, 2.20% for AFLAC, and 1.60% for Marketaxess Holdings [10] - In Monday trading, Loews shares decreased by about 0.6%, while AFLAC shares increased by about 0.1%, and Marketaxess Holdings shares rose by about 1.3% [11]

Core Insights - Aflac Incorporated (AFL) has expanded its share repurchase program by adding 100 million shares to the existing 30.9 million, bringing the total buyback capacity to approximately 130.9 million shares, indicating management's confidence in the company's long-term prospects [1][8] - In Q2, Aflac repurchased 7.9 million shares for $829 million and declared a dividend of 58 cents per share, with a dividend yield of 2.24%, surpassing the industry average of 2.05% [2][8] - Aflac ended Q2 with $7 billion in cash and cash equivalents, an 11.8% increase from year-end 2024, and maintained a total debt-to-capital ratio of 24.7%, below the industry average [3] Financial Performance - Adjusted net investment income rose to $1 billion in Q2, with the U.S. segment's pre-tax profit margin improving to 21.6% from 21.1% in 2024 [3] - Aflac Japan reported an 18.7% year-over-year sales increase to $236 million in H1 2025, driven by sales momentum from Miraito and new product launches [4][8] Industry Context - Other insurers like Aon plc and Marsh & McLennan are also engaging in shareholder-friendly initiatives, including share repurchase programs and dividends [5] - Aon repurchased 0.7 million shares for approximately $250 million in Q2, while Marsh & McLennan bought back 1.4 million shares worth $300 million [6] Valuation and Estimates - Aflac shares have gained 2.2% year-to-date, slightly outperforming the industry growth of 2% [7] - The company trades at a forward price-to-earnings ratio of 14.91, above the industry average of 12.14, with a Zacks Consensus Estimate for 2025 earnings at $6.81 per share, reflecting a 5.6% decline from the previous year [10][11]

Core Points - Aflac Incorporated's Board of Directors has authorized the purchase of up to 100 million shares of its common stock, increasing the total number of shares available for repurchase to approximately 130.9 million [1] - The company plans to conduct the share repurchase in open market or negotiated transactions based on market conditions [1] Company Overview - Aflac Incorporated is a Fortune 500 company providing financial protection and peace of mind for nearly seven decades to millions of policyholders and customers through its subsidiaries in the U.S. and Japan [2] - In the U.S., Aflac is the leading provider of supplemental health insurance products, while in Japan, it is the top provider of cancer and medical insurance in terms of policies in force [2] - The company has been recognized as one of the World's Most Ethical Companies for 19 consecutive years and has been included in Fortune's World's Most Admired Companies for 24 years [2] - Aflac became a signatory of the Principles for Responsible Investment in 2021 and has been part of the Dow Jones Sustainability North America Index for 11 years [2]

Core Insights - Aflac Incorporated (AFL) reported second-quarter 2025 adjusted earnings per share (EPS) of $1.78, exceeding the Zacks Consensus Estimate by 4.1%, although it represented a 2.7% decline year over year [1][9] - Adjusted revenues fell 11.7% year over year to $4.5 billion, but still beat the consensus mark by 2.3% [1][2] Financial Performance - The quarterly results were bolstered by increased new annualized premium sales in the Japan segment, particularly from the Miraito cancer insurance product, alongside strong sales and persistency rates in the U.S. business [2] - Adjusted net investment income was $1 billion, a slight increase of 0.3% year over year [3] - Total net benefits and claims rose 4.6% year over year to $2 billion, while total acquisition and operating expenses increased 10.9% year over year to $1.3 billion [3] Segment Analysis - **Aflac Japan**: Adjusted revenues reached $2.5 billion, a 1% increase year over year, surpassing the Zacks Consensus Estimate of $2.4 billion [4] - Total net earned premiums in Japan improved 2.7% year over year to $1.76 billion, though it slightly missed the consensus mark [4] - New annualized premium sales in Japan climbed 23.2% year over year to $143 million, driven by strong demand for the Miraito product [5] - **Aflac U.S.**: Adjusted revenues were $1.73 billion, a 2.6% year-over-year growth, but marginally missed the Zacks Consensus Estimate of $1.74 billion [6] - Total net earned premiums in the U.S. rose 3.4% year over year to $1.5 billion, supported by sales growth and strong persistency rates [6] Financial Position - As of June 30, 2025, Aflac had total cash and cash equivalents of $7 billion, an 11.8% increase from the end of 2024 [8] - Total assets grew 6.1% year over year to $124.7 billion, while adjusted debt rose 12.8% to $8.1 billion [8] - Total shareholders' equity increased 4.2% from the end of 2024 to $27.2 billion [10] Capital Deployment - Aflac repurchased 7.9 million shares for $829 million in the second quarter, with 30.9 million shares remaining for buyback [11] - The company announced a dividend of 58 cents per share for the second quarter, payable on September 2, 2025 [11] 2025 Outlook - Aflac expects a benefit ratio of 64-66% for the Japan unit and 48-52% for the U.S. unit in 2025 [12] - The expense ratios for Aflac Japan and U.S. are projected to be 20-23% and 36-39%, respectively [12] - The pretax profit margins for Aflac Japan and U.S. are estimated to be within 30-33% and 17-20%, respectively [12]

Financial Data and Key Metrics Changes - Aflac Incorporated reported net earnings per diluted share of $1.11 and adjusted earnings per diluted share of $1.78 for Q2 2025, with adjusted earnings per diluted share decreasing by 2.7% year over year [5][16] - Adjusted book value per share excluding foreign currency remeasurement increased by 5.2% [16] - The adjusted return on equity (ROE) was 13.7% to 16.4%, indicating an acceptable spread to the cost of capital [16] Business Line Data and Key Metrics Changes - Aflac Japan experienced a 23.2% year-over-year sales increase, with a notable 53% increase in cancer insurance sales driven by the new product MiRyto [6][8] - Aflac US generated $340 million in new sales during Q2, reflecting a 2.7% year-over-year increase, with strong premium persistency of 79.2% and a 3.4% increase in net earned premium [9][10] - The total benefit ratio for Aflac US was 47.3%, which is 60 basis points higher than Q2 2024, driven by business mix [21] Market Data and Key Metrics Changes - Aflac Japan's net earned premiums declined by 4.8%, while underlying earned premiums, excluding certain impacts, declined by 1.1% [17] - Persistency in Japan remained solid at 93.7%, up approximately 40 basis points year over year [19] - In the US, the expense ratio improved to 36.3%, down 60 basis points year over year, driven by improved scale and expense efficiency [22] Company Strategy and Development Direction - The company is focused on maintaining strong premium persistency and expanding its product offerings to meet customer needs throughout different life stages [8][10] - Aflac is leveraging its broad distribution channels in Japan to optimize opportunities for financial protection [9] - The company aims to continue driving profitable growth with a stronger underwriting discipline and prudent expense management [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing need for Aflac's products, emphasizing the importance of being a partner in health for policyholders [11][15] - The company anticipates a stronger second half of 2025, driven by fourth-quarter bookings and a robust pipeline [66] - Management acknowledged the competitive landscape in the medical insurance market and plans to launch a new medical product within a year [84] Other Important Information - Aflac repurchased $829 million of its own stock and paid dividends of $312 million in Q2 2025, returning a total of $1.1 billion to shareholders [12][27] - The company celebrated several milestones, including the 30th anniversary of the Aflac Cancer and Blood Disorders Center [13] Q&A Session Summary Question: Impact of new cancer product on sales - Management indicated that the new cancer product, MiRyto, has gained traction and is expected to continue performing well, with strong sales across all channels [40] Question: Japan investment income trajectory - Management noted that variable net investment income (NII) improved due to better portfolio marks and strategic trades, with optimism for a solid second half of the year [44] Question: Approach to capital deployment and M&A - Management stated that capital deployment is based on operating capital generation, with a focus on organic growth and returning capital to shareholders through dividends and buybacks [61][75] Question: U.S. sales performance and expectations - Management acknowledged sluggish sales growth in the U.S. but expects stronger performance in the second half, driven by improved recruitment and pipeline strength [66] Question: Expense ratio trends in Japan - Management expects the expense ratio in Japan to remain within the guidance range of 20% to 23%, with some technology projects driving expenses higher [73]

Financial Data and Key Metrics Changes - Aflac reported net earnings per diluted share of $1.11 and adjusted earnings per diluted share of $1.78 for Q2 2025, with adjusted earnings per diluted share decreasing by 2.7% year over year [4][14] - Adjusted book value per share excluding foreign currency remeasurement increased by 5.2% [14] - The adjusted return on equity (ROE) was 13.7% to 16.4%, excluding foreign currency remeasurement [14] Business Line Data and Key Metrics Changes - Aflac Japan experienced a 23.2% year-over-year sales increase, with a notable 53% increase in cancer insurance sales driven by the new product MiRyto [5][6] - Aflac US generated $340 million in new sales during Q2, reflecting a 2.7% year-over-year increase, with strong premium persistency of 79.2% and a 3.4% increase in net earned premium [7][8] - Aflac Japan's net earned premiums declined by 4.8%, while underlying earned premiums, excluding certain impacts, declined by 1.1% [15] Market Data and Key Metrics Changes - Aflac Japan's total benefit ratio was 66.5%, down 40 basis points year over year, while the third sector benefits ratio was 57.4%, also down approximately 40 basis points [16] - In the US, the total benefit ratio was 47.3%, which was 60 basis points higher than Q2 2024, driven by business mix [20] Company Strategy and Development Direction - The company is focusing on maintaining strong premium persistency and expanding its distribution channels in Japan, including agencies and banks, to meet changing customer needs [6][7] - Aflac aims to leverage its innovative products, such as MiRyto, to attract new and younger customers while maintaining a strong reputation for financial protection [5][13] - The company is committed to prudent liquidity and capital management, with a focus on tactical capital deployment to drive strong risk-adjusted returns [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for Aflac's products, emphasizing the importance of being a partner in health for policyholders [9][13] - The company anticipates a stronger second half of 2025, driven by fourth-quarter bookings and improved performance in various business segments [62][65] - Management acknowledged the competitive landscape in Japan, particularly in medical insurance, and plans to launch new products to enhance market position [82][86] Other Important Information - Aflac repurchased $829 million of its own stock and paid dividends of $312 million in Q2 2025, returning a total of $1.1 billion to shareholders [10][25] - The company celebrated several milestones, including the 30th anniversary of the Aflac Cancer and Blood Disorders Center and the 70th anniversary of its founding [11][12] Q&A Session Summary Question: Impact of new cancer product on sales - Management indicated that the new cancer product, MiRyto, has gained traction and is expected to continue driving strong sales performance [33][36] Question: Japan investment income and sustainability - Management noted that variable net investment income from alternatives contributed significantly to the improvement in Japan's investment income, with optimism for a solid second half [39][41] Question: Approach to capital deployment and M&A - Management emphasized a balanced approach to capital deployment, focusing on organic growth and shareholder returns, while remaining open to M&A opportunities [59][60] Question: U.S. sales performance and expectations - Management acknowledged the sluggish sales growth in the U.S. but expressed optimism for a stronger second half driven by improved recruitment and performance in specific segments [62][65] Question: Frequency of product refresh cycles - Management confirmed that the refresh cycle for cancer insurance is three years, while medical insurance is two years, contingent on regulatory approval [97]

Financial Performance - Net earnings per diluted share decreased by 642% from $310 in 2Q24 to $111 in 2Q25[9] - Adjusted earnings per diluted share decreased by 27% from $183 in 2Q24 to $178 in 2Q25[9] - Adjusted earnings per diluted share excluding foreign currency impact decreased by 55% from $183 in 2Q24 to $173 in 2Q25[9] - U S GAAP ROE decreased from 283% in 2Q24 to 90% in 2Q25[12] - Adjusted ROE decreased from 143% in 2Q24 to 137% in 2Q25[12] - Adjusted ROE excluding foreign currency remeasurement decreased from 175% in 2Q24 to 164% in 2Q25[12] Business Segment Performance - Aflac Japan's premium persistency remained relatively stable at 933% in 2Q24 and 937% in 2Q25[15] - Aflac Japan's QTD actual operating ratios for 2Q25 include a benefit ratio of 665%, an expense ratio of 206%, and a pretax profit margin of 320%[18] - Aflac U S's persistency remained relatively stable at 787% in 2Q24 and 792% in 2Q25[20] - Aflac U S's QTD actual operating ratios for 2Q25 include a benefit ratio of 473%, an expense ratio of 363%, and a pretax profit margin of 225%[22] Capital Management - The company's estimated regulatory ESR in Japan is >240% and the combined RBC ratio in the U S is >600% as of June 30, 2025[24] - The company's adjusted leverage ratio increased from 195% in 2Q24 to 225% in 2Q25[29]