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I think Aviva shares could be a stock market crash bargain worth buying

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Aviva (LSE: AV) shares are one of the FTSE 100’s top income stocks. However, over the past few years, the value of the shares has fallen as the company has struggled for direction.

But this could be about to change. With a new CEO with the helm, Aviva shares may be able to generate high total returns for investors in the years ahead.

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Aviva shares on offer

Last week the insurance group announced that it had appointed Amanda Blanc as its new chief executive. This is widely expected to lead to a wave of change at the insurance organisation. The incoming CEO has experience at Axa’s UK business and Zurich’s European operation. Analysts believe that she will shake up the company, which has been in the pipeline for some time.

The group has a big business in the UK but also operations in Europe and Asia. Management has been trying to decide what to do with these international businesses for some time. Aviva’s brand is more influential in the UK than anywhere else, so it may make sense for the company to concentrate on growth in its home market.

Splitting its insurance and pensions business divisions may also be positive for Aviva shares. Doing so could free up capital and allow the company to pursue growth in other markets.

Aviva shares have languished over the past few years due to the company’s lack of direction. This could be about to change with the new CEO in the hot seat. That may mean that now could be a good time for long-term investors to buy into this FTSE 100 dividend champion.

Margin of safety

Since the beginning of 2020, Aviva shares have slumped by 33%. This does not reflect the company’s underlying fundamental performance. It’s latest trading update showed a strong performance across all business divisions, even though the coronavirus crisis did have an impact.

As such, it looks as if the stock offers a margin of safety at current levels. The share price decline seems to be overstating the negative impact on the business. Indeed, based on current analyst estimates, the stock is trading at a forward price-to-earnings (P/E) multiple of just 5.7.

There is also a good chance the company will reinstate its dividend later this year. Aviva shares are known for their income potential, but the group suspended dividend payouts earlier this year at the request of regulators.

The restoration of the payout would be highly favourable for the share price. For the 2018 financial year, Aviva shares offered a dividend payout of 30p each. At the current share price, that suggests the stock could provide a dividend yield of 11% when the payout is restored.

As such, buying Aviva shares in a portfolio of stocks today may lead to high total returns over the long term for investors.

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Rupert Hargreaves does not own any 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.

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