Aflac (NYSE: AFL) has built an impressive reputation among income investors by raising its dividend for 43 consecutive years, a milestone few companies ever reach.
The most recent dividend increase came in at 5.2%, announced at the start of 2026, signaling continued confidence from management in the company’s financial health.
Aflac operates in the supplemental insurance space, selling policies designed to be purchased alongside traditional coverage rather than as a replacement for it.
A typical Aflac product is a cancer policy, where a customer pays regular premiums and receives a set payout upon diagnosis to help cover out-of-pocket expenses.
Like all insurers, Aflac profits when the premiums it collects exceed the claims it pays, a straightforward model that has served the company well for decades.
The company also benefits from what is known as “float,” the pool of premium cash it holds and invests before paying out claims, generating additional investment income.
Despite the familiar insurance mechanics, Aflac carries a geographic concentration that sets it apart from most of its peers and demands close attention from shareholders.
In the first quarter of 2026, Aflac generated $4.3 billion in total revenue, with roughly $1.6 billion of that figure coming from its Japanese operations alone.
More striking is the earnings split: Japan contributed $759 million in pre-tax adjusted earnings during the quarter, while the U.S. business produced just $363 million.
That means Japan accounts for approximately two-thirds of Aflac’s pre-tax adjusted earnings, making the yen-dollar exchange rate a genuinely material factor for the company’s financial results.
Significant currency swings in either direction can directly affect reported earnings, making foreign exchange one of the most important variables for investors to monitor on an ongoing basis.
To its credit, Aflac has managed this currency exposure effectively over the long term, as demonstrated by its unbroken streak of annual dividend increases spanning more than four decades.
The company also aggressively repurchases its own stock, a strategy that reduces the total share count and lowers the capital required to sustain and grow its dividend payments.
Fewer shares outstanding create more headroom for future dividend increases, helping Aflac maintain its status as a reliable and consistent income generator for long-term shareholders.
Aflac currently carries a dividend yield of roughly 2%, positioning it as a steady grower rather than a high-yield play within the insurance sector.
The Japan exposure is ultimately not a reason to dismiss the stock outright, but it is a factor that income investors should understand clearly before adding shares to a portfolio.
