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Aviva‘s (LSE:AV.) a FTSE 100 share I opened a position in almost a year ago. I’ve topped up my holdings since then. And I plan to extend my stake once more once I subsequent have money to take a position.
I imagine the monetary companies large appears to be like extremely engaging by way of progress and dividends. And its shares additionally look grime low-cost throughout quite a lot of measures too.
Right here’s why I believe the corporate’s a prime blue-chip to think about proper now.
Progress
Earnings progress’s been patchy at Aviva in recent times. Its backside line dropped through the Covid-19 disaster, after which once more in 2022 on account of rising rates of interest.
However the firm moved again into progress in 2023. And Metropolis analysts count on earnings to maintain rising over the following three years no less than, and by wholesome double-digit percentages:
| 12 months | Earnings per share | Earnings progress |
|---|---|---|
| 2024 | 43.98p | 17% |
| 2025 | 50.87p | 16% |
| 2026 | 55.83p | 10% |
These shiny forecasts replicate analyst expectations of falling rates of interest and bettering financial circumstances. Mixed, these may stimulate shopper spending and increase the efficiency of Aviva’s asset administration division.
Income may also profit from ongoing demographic adjustments in its European and North American markets. Extra older folks means increased demand for retirement, safety and wealth merchandise.
Dividends
Like earnings, Aviva’s dividend report has been up and down since 2019.
Nevertheless, with earnings tipped to shoot increased — and the corporate’s steadiness sheet considerably strengthened below present CEO Amanda Blanc — shareholder payouts, which have risen steadily because the finish of the pandemic, are tipped to observe swimsuit:
| 12 months | Dividend per share | Dividend progress |
|---|---|---|
| 2024 | 35.43p | 6% |
| 2025 | 38.13p | 8% |
| 2026 | 40.88p | 7% |
Dividends are by no means assured. However Aviva’s cash-rich steadiness sheet places it in nice form to fulfill these forecasts.
Its Solvency II shareholder protection ratio was 205% as of June, greater than twice the extent that regulators require.
Worth
Based mostly on present earnings forecasts, Aviva shares commerce on price-to-earnings progress (PEG) ratios of 0.6 for 2024 and 2025, and 0.9 for 2026. Any studying under 1 signifies {that a} share is undervalued.
The Footsie firm additionally affords wonderful worth based mostly on anticipated earnings. Dividend yields are an enormous 7.4% for this 12 months, 8% for 2025 and 8.6% for 2026.
By comparability, the common dividend yield for FTSE 100 shares sits means again at 3.7%.
A prime purchase
As with all UK share, Aviva exposes its buyers to a level of danger. Income and dividends may disappoint if, for instance, rates of interest fail to say no steadily, dampening product gross sales. It additionally faces intense competitors from the likes of Authorized & Normal, Zurich and AXA.
However on steadiness, I imagine the potential advantages of proudly owning Aviva shares outweigh these dangers. And its low valuation supplies a cushion in case newsflow worsens which, in flip, may restrict any share value reversals.
On steadiness, I believe Aviva’s the most effective ‘all-rounders’ on the FTSE 100 at the moment.
