Why I'm Fed Up With Aviva Plc

Difficult on Aviva. Could be a 2 or 3 bagger over the next 2-5 years, or it could bomb by more than 50%.

Im in for 10% of my portfolio, and as a gambling man I equate Aviva to sticking a roulette bet on red, but rather than winning 100% or losing 100% on roulette, Aviva will win maybe 200% or lose 50%.

As a rank amateur Harvey, Aviva seems to be paying me back my initial stake in 14 years. If the dividend drops slightly, that could stretch to 16 years. My foolish analysis is that Aviva will still be around to pay dividends in 20 years providing European legislation doesn't destroy all the British financial Institutions. I never viewed Aviva as a growth investment, but as a continuing source of dividend income. I am quite happy with my bread and butter today thank you, and if jam doesn't come tomorrow...there is always Tesco.

My strategy on this one is set a stop to protect the downside and treat it is an annuity.If I get decent capital appreciation over time I will be happy. Look elsewhere for growth.

Well I won't bother reposting my original comment - it wasn't rude or contentious, but someone was obviously feeling sensitive, so it got nixed.

I will reiterate, in the hope that this one gets through, that it's not realistic to get "fed up" with a stock like AV after just 3 years, particularly in the current euro climate. It has already returned 13%-ish in income alone.

I understand Harvey's frustration, particularly when you compare it's performance to Pru (I remember when I first bought into Aviva in 2009 and was tossing up between Aviva and Pru and went for Aviva... Pru was 300 then and Aviva 220, Pru is now 940 and Aviva 360 :-S.

While I still hold Aviva (and have since topped up a few times on dips and am averaging 260p) I don't see it as a keeper in the same way I do e.g. Vod or GSK. I feel I'm waiting to sell (above 400p, having missed the opportunity a couple of years back), but happily collecting the divie in the meantime... I wouldn't by in at the current price though!

he who dares....

I can also sympathise with this situation, but if I may also offer a few mitigating reasons why AV. is maybe a less than a solid option for long term capital investment, which in my view is effectively what we require when trusting our capital to a high-yielding income stock.

It's a shame to say that AV.'s long term record with shareholder funds has been torturous for the long-haul, patient investor. While Aviva has remained profitable most years, the company operates in an industry where it is exceptionally difficult to grow shareholder capital over time (I feel that this is also indicated in RSA's record over the same period).

The dividend track record since the early 1990s has been volatile to say the least, varying between 24p and 40p per share, a peak that was set in 1997 and never repeated. Per-share earnings have fallen in 11 out of the last 18 years, an astonishing record, while swinging wildly between -71p and 90p from year to year. While a symptom of AV.'s competitive unwelcoming industry, this record shows hard hard it is to make money as a shareholder in this type of business.

We all know the saying about past performance and future returns, and I may be wrong to be extremely cautious in this type of industry. But when there's no precedent for a company to do well with shareholder funds over time, it becomes harder to be convinced that an investor should trust a company with their hard earned capital. That's especially the case when investing for income in my view, where a long-term commitment is required, and where total-returns are a function of both capital growth and dividend reliability.

That being said, I wish all holders the best of luck. As I've also thought about RSA in the past, it takes a strong character to be a long-term investor in such a difficult industry, where prices are set by the lowest bidder and a commodity service is offered. Three years is only a short time to wait for "jam tomorrow" in the grand scheme of investment, where 7-10 year horizons are the most ideal, but the frustration is understandable. I worry that jam might randomly be distributed over the course of a decade, with no guarantee that your jar will still be worth as much by the end of it.

Given a pick of insurance businesses, while the dividend income isn't nearly as attractive, I'd strongly recommend investors to take a look at American Family Life Assurance Company of Columbus (Aflac, on the New York market as AFL). Their track record with shareholder funds has been more than satisfactory, and the price is currently very reasonable compared to decades of dividend growth (over 25 years) and outstanding business performance.

I sold AV after making a small gain plus a dividend. My main reasons for buying were discount to book value and the dividend.

The US assets were sold at a discount to book. A lot of the residual business is in Italy and Spain. Both these factors make me query book value. This is easier to manipulate in insurance / life assurance than say a farm or car dealership as values now are based on a lot of assumptions and estimates over future loss rates, costs, mortality stats, etc.

Secondly with the new CEO arriving, I feel he is likely to cut the divi and put the firm on a more sustainable basis.