August has been a superb month for FTSE 100 insurer Aviva (LSE: AV). The Aviva share value hit a degree final seen in 2008, when the monetary disaster was taking maintain.
It has been a protracted highway! Nonetheless, extremely, the Aviva share value is barely half what it was within the late Nineties.
Whilst a long-term investor, I despair on the considered placing cash right into a share and nonetheless nursing a big paper loss over 1 / 4 of a century later. Sure, Aviva’s dividend yield of 5.7% is enticing, however share value actions matter too.
Nonetheless, because the current value motion reveals, Aviva appears to have the wind in its sails now. It has moved up 29% over the previous yr alone. May it make sense for traders to think about the share now?
Comparisons might be useful, but additionally unhelpful!
First, a phrase in regards to the value having now come full circle since 2008.
Does that counsel something in regards to the state of the general monetary market proper now, corresponding to that we could also be in an analogous scenario to 2008?
There are some similarities, however there are additionally a whole lot of variations. That’s true for the market general and it’s actually the case for Aviva, particularly.
It has actually streamlined its enterprise lately, promoting off a number of operations and having a far clearer strategic concentrate on its core UK market, in addition to a number of different locations.
Aviva is performing strongly
That has solely been a part of the strategic medication doled out beneath present administration.
Aviva’s takeover of UK rival Direct Line has added to its already large UK operation. That ought to supply economies of scale, but it surely will increase the focus danger: if the UK normal insurance coverage market enters right into a interval of sturdy value competitors, for instance, Aviva will certainly be affected.
I additionally assume it’s value ready to see how the Direct Line acquisition finally pans out. The corporate had a disappointing couple of years earlier than it was taken over.
It stays to be seen whether or not higher administration can repair its issues or if an excessive amount of injury had already been accomplished, for instance, in the case of Direct Line’s repute with clients.
Regardless of such considerations, there is no such thing as a denying that Aviva has been doing very nicely lately. Within the first half of this yr, in comparison with the prior yr’s equal interval, the interim dividend grew 10%, underpinned by working revenue up by greater than a fifth and what is named Solvency II personal funds technology up by 20%.
One to think about
Which means Aviva is throwing off massive quantities of surplus money. That has helped it develop its dividend handsomely lately following a lower in 2020.
I see lots to love right here and reckon Aviva is a share value contemplating, even after its current value development.
