Director dealings are essentially insider transactions for shares between directors and the companies they work for. These dealings are always made public, and are often considered a good indicator of a company’s future prospects. However, they don’t get nearly as much attention as other company news due to their complex nature. Nonetheless, here I’m breaking down this week’s biggest director dealings from three FTSE firms.

Aviva

Aviva (LSE: AV) is a British multinational insurance company. It has millions of customers across its core markets. Aviva is also the UK’s largest general insurer. This week, an influential director purchased shares through the firm’s Global Matching Share Plan.

• Name: Jason Storah
• Position of director: Chief Executive Director
• Nature of transaction: Partnership shares and matching shares
• Date of transaction: 15 July 2022
• Amount bought: 38.413602 @ £3.93
• Amount received: 76.827204 @ £3.93
• Total value: £452.70

Royal Mail

Royal Mail (LSE: RMG) is Britain’s biggest postal service and courier company. The group runs the brands Royal Mail and GLS. It released its Q1 trading update this week. Two director dealings also occurred.

• Name: Mick Jeavons
• Position of director: Chief Financial Officer
• Nature of transaction: Free shares (Deferred Share Bonus Plan 2019)
• Date of transaction: 18 July 2022
• Amount bought: 14,132 @ nil
• Total value: £N/A

• Name: Katherine Amsden
• Position of director: PCA of Mark Amsden, Group General Counsel and Company Secretary
• Nature of transaction: Purchase of shares
• Date of transaction: 21 July 2022
• Amount bought: 34,262 @ £2.92
• Total value: £99,977.21

Deliveroo

Deliveroo (LSE: ROO) is a British online food delivery company. It operates in over 200 locations across the UK and internationally. In the UK, it is the second-biggest food delivery platform. In this week’s transaction, a director exercised their option to redeem stock compensation.

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Free shares
• Date of transaction: 15 July 2022
• Amount received: 83,400 @ £0.85
• Total value: £70,973.40

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Sales of shares to cover tax liabilities
• Date of transaction: 15 July 2022
• Amount sold: 40,407 @ £0.85
• Total value: £34,345.95

Types of shares in a SIP

To provide context, there are a few types of shares within a company’s share incentive plan (SIP). A SIP is an employee plan for companies within the UK to flexibly award equity to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this week’s director dealings, Aviva’s CEO opted to purchase partnership shares. Partnership shares give employees the opportunity to buy shares via deductions from their salary, before tax deductions. But where partnership shares are offered, the company can also offer matching shares. This can range up to a maximum ratio of two free matching shares per partnership share purchased, as was the case. That being said, it’s important to note that matching shares must normally be held in a trust for at least three years, and held for five years in order to receive full tax relief. However, these shares may be forfeited if an employee withdraws their partnership shares from the trust.

On the other hand, the Royal Mail CFO received free shares. This occurred under the company’s Deferred Share Bonus Plan from 2019. Having said that, the director is expected to retain their share-based awards until they achieve an equivalent of 200% of their salary.

As for Deliveroo’s CFO, he received free shares. These are a form of restrictive stock units (RSU). RSUs are a form of stock compensation. It is a promise from the company to award a company’s shares in the future. RSUs are most often used in younger companies. This is because cash on its balance sheet is used to grow the business instead.

The post Director dealings: Aviva, Royal Mail, Deliveroo appeared first on The Motley Fool UK.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Deliveroo Holdings Plc. 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.

Aviva (LSE: AV) shares now yield an incredible 9.4%. That number is so staggering, I had to double check it. The insurance giant has been one of my favourite FTSE 100 stocks for years, but now its dividend income is off the chart. 

My first instinct is to buy, buy, buy, but then another thought hit me. One reason the dividend is so high is that the Aviva share price has performed poorly. It is down 25.97% over the last year. Over five years, it is down 42.09%. Am I in danger of stumbling into a value trap? 

Anybody looking at the FTSE 100 insurer’s share price chart will see a massive crash in May, but don’t be misled. The slump was down to Aviva’s share consolidation, which included a new B share scheme designed that has just returned a staggering £4.75bn to shareholders.

Aviva shares look incredibly cheap

Aviva still looks like a bargain as its shares are valued at a dirt-cheap 7.2 times earnings. Coupled with that dividend, they look like a buy to me.

The problem is that I’ve been saying that for years. I’ve just stumbled across an article I wrote in 2013, entitled: Why I’m Fed Up With Aviva. I concluded: “Turning this wayward, lumbering beast around [is] going to take time.”

Nine years later I find myself delivering pretty much the same analysis. So what have I learned from this trip down memory lane? 

With Aviva, low share price growth looks built in. Today’s valuation isn’t an unmissable buying opportunity, but par for the course. Management has spent the last decade offloading non-core assets and slashing costs, but the stock still fails to grow.

That’s just how Aviva rolls.

Yet I’d still buy it today. If Aviva’s main attraction Aviva is its income stream, then I might as well invest when that is off the chart. As far as I’m concerned, 9.40% is off the charts. Especially since the dividend is still covered a fairly healthy 1.5 times earnings. 

I’m not expecting Aviva shares to suddenly start rocketing. Although from today’s low starting point, I can surely hope for some share price growth.

Even if I don’t get it, that sky-high dividend yield, second only to Persimmon on the FTSE 100, will return my money in just 11 years.

Also, one of the purposes of my portfolio is to build up a passive income stream for my retirement. Aviva’s shares look brilliantly placed to do that. 

The underlying business is doing reasonably well, as revenues from general insurance have just hit a 10-year high. 

The group is on track to deliver savings of £750m by 2024, and chief executive Amanda Blanc is keen to reward loyal shareholders. She plans to pay dividends totalling £870m this year, rising to £915m in 2023. 

The Aviva share price may go nowhere fast, but its juicy yield should make it worth the ride.

The post Aviva shares now yield more than 9% and I’d buy them today appeared first on The Motley Fool UK.

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• Here’s how I’m targeting £13,534 in yearly passive income from £20,000 in this FTSE financial star
• Here’s how long-term investors can benefit from a stock market crash
• Aviva’s share price has left rivals in the dust. Here’s why it’s still good value

Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

What’s going on with the Aviva share price? 

Investors looking at the Aviva share price chart might be slightly concerned at its recent drop. However, there’s no need to be. Indeed, the drop was prompted by its B share scheme, where the company returned £3.75bn to shareholders. A B share scheme is similar to a special dividend but deemed more tax efficient. This returned the proceeds from the company’s disposals of its international subsidiaries. However, as the cash is no longer on the balance sheet, the large drop in the Aviva share price was expected. 

To make things slightly more complicated, Aviva also conducted a share consolidation, at a ratio of 76:100. This means that for every 100 shares held by an investor, they received 76 back. This does not affect the value of the firm, however.   

What factors should be considered? 

Despite selling off its international subsidiaries, Aviva continues to perform strongly. For example, in the first three months of 2022, UK & Ireland Life sales were up 2% year-on-year, with particularly strong growth in the annuities sector. The firm also highlighted growth in the General Insurance sector, which achieved its best quarterly sales in a decade. Aviva noted that this was because â€œpeople were attracted to the strength of the Aviva brand and the quality of [their] products”.This bodes well for the future. 

There was a slightly less promising update from the wealth management sector, though. In fact, overall sales were down 3% year-on-year and overall assets under management fell 1% to £150bn. This is mainly due to market volatility. However, while this may be a short-term problem, it still points to negatives around the Aviva business model. If this fails to improve, it’s a factor that could strain the Aviva share price. 

But I’m not buying Aviva shares for growth. Instead, it’s establishing itself as one of the most reliable income stocks around. Indeed, this year, Blanc has already promised to raise the dividend to 31p per share, and 32.5p in 2023. This equates to a current yield of 7.6%, one of the highest in the market. 

What am I doing now? 

Market uncertainty can be particularly damaging for insurance firms, as shown when Aviva cancelled its dividend during the 2020 stock market crash. But after its disposals, the firm seems to have a clearer focus. The large dividend payouts are also extremely tempting. Therefore, I’ll continue to add Aviva shares to my portfolio at its current price. 

The post A 7.6% dividend yield! Is the Aviva share price a bargain not to be missed? appeared first on The Motley Fool UK.

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• Here’s how I’m targeting £13,534 in yearly passive income from £20,000 in this FTSE financial star
• Here’s how long-term investors can benefit from a stock market crash
• Aviva’s share price has left rivals in the dust. Here’s why it’s still good value

Stuart Blair owns shares in Aviva. 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.

Aviva (LSE: AV) shares aren’t what you would call whizzy. I wouldn’t buy them in the hope of enjoying rapid share price growth. I’d buy them for solid, reliable, long-term dividend income.

Perhaps I’m being harsh. Aviva shares have had their moments. Measured over two years, the FTSE 100 insurer is up 75%. Despite that purple patch, they still trade 25% lower over five years. Recent dividend history has been bumpy too.

Today, Aviva shares would give me annual income of 5.3% a year. That is forecast to rise to 7.4% in the year ahead, nicely covered 1.5 times by earnings.

I like this top FTSE 100 income stock

Yet Aviva’s recent shareholder payouts reveals a more troubling picture. In April 2020, at the start of the pandemic, management axed the company’s dividend altogether. There’s no great shame in that, as management was under pressure from the regulator. Yet insurance rival Legal & General Group stood firm to pay out dividends of £750m.

Then in November 2020, new chief executive Amanda Blanc cut the dividend by a third to 21p. Blanc said the aim was to start restoring the payout as she worked to secure and simplify the business. Since then, progress has been patchy. In 2020, Aviva shares paid 27p. In 2021, that fell to 22.05p. 

So what does the future hold? Right now, Aviva shares trade at 12.8 times earnings. Their forecast valuation is a cut-price 9.7 times earnings. I love buying cheap FTSE 100 shares at reduced prices, but there is a proviso. 

At some point I want them to show some sign of life, so I don’t end up falling into a value trap. Which, judging by the last decade of underperformance, is a real danger when buying Aviva shares.

When Blanc took over, Aviva was all over the place. She tackled that by offloading its Italian, Turkish and French operations for £7.5bn. In total, eight non-core businesses have gone. The group is now a much leaner business, focused on its core UK, Ireland and Canada markets. 

I’d buy Aviva shares for income, not growth

Loyal shareholders are now glimpsing their rewards. In March, Aviva pledged to return £4.75bn though buybacks and dividends. The 2022 dividend will rise 40% to a forecast 31.5p per share. That swings the argument in favour of buying Aviva shares for me.

Last year’s results were a mixed bag (a bit like Aviva shares generally), with adjusted annual operating profit falling 10% to £1.63bn. Its workplace pensions and advisory platform did well, while retail annuities were weaker.

Yet the company does appear to be heading in the right direction, even if it has some way to go to catch up with rival L&G. I’d buy Aviva shares today, with the intention of holding them for years, to ride over further short-term bumps. I’d reinvest those dividends for growth today, then draw them as income when I finally retire.

The post Aviva shares are set to yield 7.4%. Should I buy that income today? appeared first on The Motley Fool UK.

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• 3 of the best UK growth, value and dividend shares to consider in an ISA!
• How much do I need in an ISA to cover a £137 monthly energy bill for life?
• Here’s how I’m targeting £13,534 in yearly passive income from £20,000 in this FTSE financial star
• Here’s how long-term investors can benefit from a stock market crash
• Aviva’s share price has left rivals in the dust. Here’s why it’s still good value

Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

A dividend stock

Aviva (LSE: AV) has bounced back well from the start of the crisis, with the insurance company posting resilient earnings and making some good business moves. For example, it is making good progress in simplifying the business and focusing on its core markets in the UK, Ireland and Canada. This has included the sale of both Aviva Singapore and Aviva Vita in Italy for a combined £2bn. Such simplification of the business will hopefully allow the company to grow profits, in turn increasing long-term shareholder value.

It may also seem ironic to call Aviva a dividend stock, despite the fact that it has cut its dividend by a third. But in comparison to other FTSE 100 stocks, a dividend yield of over 6% is extremely impressive. In addition, although disappointing to shareholders, the dividend cut seems very wise. Firstly, it will allow the insurer to deleverage, which in turn should strengthen the balance sheet. Secondly, it will also allow the group to increase the dividend in the years ahead. These increases are expected to be either low or mid-single-digits each year.

This FTSE 100 stock is still down 45% this year

BP (LSE: BP) is the other stock I think is far too cheap. Although oil prices remain very low, and problems still abound in the industry, BP shares do look set for a recovery. It has also been boosted by news of vaccines, which should help increase demand for oil.

But vaccines are not the only cause for optimism. For example, the third-quarter trading update was fairly positive, as shown by a profit of $100m. Although significantly lower than the $2.2bn last year, this is still a very good result in challenging conditions. Even more impressive was the fact that net debt has fallen to $40.4bn. This is compared to a figure of $46.5bn a year ago. While the gearing ratio is higher than the company will want, I am very encouraged by these figures.

Alongside its transition into greener energy, these recent results increase my confidence for a long-term recovery. Of course, the road to recovery will not be instant, but a dividend of over 6% should help satisfy investors for the short term. I’d therefore snap up this FTSE 100 stock now while it remains under 300p.

The post The Footsie is rising but these FTSE 100 stocks still look cheap to me appeared first on The Motley Fool UK.

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Stuart Blair owns shares in Aviva and BP. 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.