The Aviva share price (LSE:AV.) is currently down around 40% since May 2018.
The company is a multinational insurance company with a London headquarters. It provides life, general, and health insurance predominantly, but also offers asset management, pension, and digital services.
Current price analysis
Here are some of the core reasons I think the price has declined in recent years.
First, in 2016, Brexit uncertainties impacted investor confidence in Aviva. This was due to regulatory shifts associated with the company and economic challenges contributing to market volatility.
Second, CEO Mark Wilson resigned suddenly in 2018. This created significant concern over the organisation’s future.
Third, the company’s approach to Asian markets and its geographical diversification have caused concerns over the effectiveness of its operational strategies.
When I consider these reasons for the decline, I still think the price deserves to be higher right now.
Key current financials
I think the organisation’s recent 8% increase in operating profit for the first half of 2023 is a significant positive.
However, it had -£0.4 in earnings per share for the financial year 2022. The company reported a £1.1bn loss, compared to a £2bn profit the year before.
This could largely be attributed to asset value declines and investment losses. This is evident because profit from continued operations increased 35% in 2022 compared to the year before.
Not every company can be exceptional. Also, despite their weaknesses, some companies remain investable.
Let’s look at one of the reasons why I think Aviva would remain a potential choice for my portfolio if I was focused on dividends.
A large 7.3% dividend yield
The company’s 7.3% dividend yield, which is close to a two-year high, is remarkable to me.
In fact, I could argue that the company is a good investment based solely on its dividend and low price combined.
Although the payouts have been cut during times like the 2008 financial crisis and the pandemic, the dividends have been paid pretty consistently.
The main downside I can see is the fluctuation in yield, which has ranged from 3% in 2013 to 7.3% today.
To buy or not to buy?
I’m a deep value investor at heart, but I also have a soft spot for growth.
I want to know I’m buying shares that are going to expand, grow, and dominate in years to come.
Not every company can be like that, however. Aviva certainly isn’t—it’s more of a stalwart. I don’t think it will do anything special in terms of share price soon.
Mind you, tell that to the investors who purchased the shares pre-2008. I bet they’re wishing they had invested their cash elsewhere.
At the end of the day, if the share price doesn’t at least stay the same, a dividend yield can be useless.
Who wants a 7% payout when you just lost 50% of your asset value? Not me, I’ll tell you.
