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Is time running out to buy the Aviva share price and that 7.6% yield?

The last time I covered the Aviva (LSE: AV) share price, I noted the firm’s discount valuation, along with its 8.1% dividend yield (at the time of writing) looked too attractive to pass up. That was around a month ago and, since then, the stock has added around 10p, or 31p including dividends, giving a total return of approximately 7.4%. 

The thing is, I think this could be just the start of a much bigger rally for the Aviva share price. Today, I’m going to explain why I believe time could be running out to buy into this undervalued income opportunity. 

Back to normal 

As I explained the last time I covered the stock, Aviva has been without a CEO for much of the past 12 months, and this has concerned the City. While the group is large enough to manage without, a lack of direction has left some analysts wondering what’s next for the long-term savings manager. 

The good news is, at the end of April, Aviva’s new CEO Maurice Tulloch started taking action to put his mark on the company. He has replaced the head of Aviva’s UK insurance business and added the head of the group’s Canadian and French businesses to the senior management team. 

These changes are part of Tulloch’s plan to “re-energise” the group and “are an important first step to bring greater energy, pace and commercial thinking to Aviva.” They also seem to suggest the new CEO is planning to place a greater emphasis on growing Aviva’s presence in its international markets, which could be a vital source of growth for the firm over the next few years. 

Growth ahead 

It would appear Aviva’s new CEO might be planning a big growth push too. He’s not yet published details on this plan, but I think we’ll hear more about Tulloch’s ideas over the next few months. 

The City has already thrown its support behind him, Since the beginning of the year, analysts have hiked their 2019 growth expectations for the company by around 6%. Analysts now believe the firm will produce 61.5p of earnings per share in 2019, putting it on a forward P/E of 7, which still dirt cheap, in my opinion. Shares in Aviva are also projected to yield 7.5% in 2019, with the distribution covered twice by earnings per share. 

When the company publishes its plans for growth over the next few years, I don’t expect its valuation to remain depressed for long. With that being the case, I think now could be a great time to buy shares in Aviva ahead of additional market updates from the enterprise.

With the shares trading at a discount of nearly 60% to the rest of the UK insurance industry, the potential reward on offer here is more than worth the risk of investing, in my opinion. There’s also that 7.4% dividend yield while you wait. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.