The Motley Fool

Why I’m Bullish On Aviva plc

Although I consider myself to be an income-seeking investor, I’ve always been of the opinion that a dividend must first be sustainable before I consider investing in the company.

Indeed, there seems to be little point in investing in a company that, in the long run, will be unable to afford its dividend payments. Doing so may be fine in the short run but, as a longer term investor, it makes little sense to me.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

So, the fact that Aviva (LSE: AV) (NYSE: AV.US) cut its dividend payments in March of this year seems to me to be a sensible move.

Moreover, although there were murmurings among some investors of it no longer offering a 6%+ yield, it looks as though the cut was logical, prudent and showed that management are acting in the best interests of long-term shareholders.

Indeed, the most recent results released by the company show that its turnaround story is progressing well. The value of new business increased by 17% in the first half of 2013 versus the comparative period in 2012, with particularly encouraging growth being seen in France, the UK, Poland and across Asia.

Furthermore, profit after tax improved considerably, with Aviva making a profit of £776m having made a loss of £624m in the first half of 2012. Cash flows, meanwhile, have also increased by 30% to £573m, with operating capital generation being slightly higher at £936m versus £906m in 2012.

Commenting on the results, Aviva  chief executive Mark Wilson said that tackling the ‘legacy issues’ will take time, but that he is “committed to achieving for investors what we set out to do: turning around the company to unlock the considerable value in Aviva”.

Of course, shares currently yield less than they did before the dividend cut, but a prospective yield of 4% still looks very good to me — especially now it is far more sustainable than it previously was.

In addition, shares seem to offer good value, trading on a price-to-earnings (P/E) ratio of 8.8. This compares favourably to the FTSE 100 and to the wider financials industry group, which have P/Es of 15.1 and 18.8 respectively.

So, Aviva looks to be making a comeback, with growth opportunities in emerging markets as well as certain developed ones (including the UK). Furthermore, shares offer an above average (and sustainable) yield and relatively cheap valuation.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

> Peter owns shares in Aviva.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.