FTSE 100 dividend stocks can be a great source of passive income. However, investors need to be selective when investing in these shares as dividends can be cut or cancelled at any time and there’s also the risk of capital losses.
Here, I’m going to highlight a Footsie share that to me, looks like a solid income bet. With a high dividend yield and low valuation, could it be worth considering for a Stocks and Shares ISA or Self-Invested Personal Pension (SIPP)?
Attractive levels of income on offer
The stock in focus today is insurance and wealth management powerhouse Aviva (LSE: AV.). It’s lagged the broader UK market this year and, at current levels, I believe it’s worth a closer look.
The dividend yield certainly looks attractive. With analysts forecasting a payout of 41.5p per share for 2026 and 44.6p for 2027, we’re looking at yields of around 6.5% and 7% at today’s share price.
On a £10,000 investment, that translates to income of around £650 and £700 a year. Investors shouldn’t bank on this level of income however, as those dividend figures above are just estimates.
What’s encouraging though, is that dividend coverage, or the ratio of earnings per share to dividends per share, is solid at around 1.4 times. This suggests there’s a relatively low chance of the dividend coming in at substantially lower levels.
One other thing to note is that the company’s current dividend policy involves growing the cash cost of its payout by mid-single digits annually. Given that its payout for 2025 was 39.3p per share, those forecasts stack up.
A low valuation
Looking beyond the dividend, we also have a relatively low valuation. With analysts expecting earnings per share of 58.p this year, the forward-looking price-to-earnings (P/E) ratio is only 11.
There could be some value on offer at that multiple. It’s worth noting that the average analyst price target is 706p – about 10% above the current share price.
Business momentum
Importantly, the company’s performing well at the moment. For example, recent Q1 results showed a 19% year-on-year increase in general insurance premiums (this was helped by the acquisition of Direct Line) along with wealth net flows of £3.3bn versus £2.3bn a year earlier.
“We have made an excellent start to 2026. Our continued strong trading performance, high quality balance sheet, and diverse set of leading businesses, gives us confidence that we are well placed to meet our group targets, and deliver even more for our customers and shareholders this year.”
Aviva CEO Amanda Blanc
I’ll point out that I see a lot of potential in the company’s wealth management division, which now has assets under management of around £230bn. This division should do well as markets rise over time and people save and invest more for retirement.
Worth a look?
Now, there are plenty of risks here, of course. One that’s worth highlighting is potential volatility in the UK government bond markets due to political uncertainty – this could impact the value of fixed-income securities on Aviva’s balance sheet.
With the stock trading well off its recent highs though, I like the risk/reward skew. For those seeking passive income, this FTSE 100 stock could be worth a closer look.
Should you invest £5,000 in Aviva Plc right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aviva Plc made the list?
Edward Sheldon does not hold any positions in the companies mentioned
