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Global stock markets started the year well. He S&P 500 has risen 9.1%, while the Japanese TOPIC has jumped 14.2%. However the FTSE 100 it has added only 2.3% this year. Meanwhile, the share prices of some of its components are doing well, including Aviva(LSE: AV).
Turning 24 years
I worked in the insurance industry when Aviva was created through the merger of Norwich Union and CGU in 2000. The group was later renamed Aviva (“young” in Latin) in July 2002, but its roots date back to 1696.
Aviva currently has around 18 million customers in the UK, Ireland and Canada. It is the largest general insurer in the country and also offers life, pension and investment policies. But CEO Amanda Blanc fell on hard times when she took over in July 2020.
Aviva advances
In 2020, coronavirus restrictions sent stock prices tumbling around the world. In mid-2020, Aviva's slumping share price nearly fell below £2. However, it recovered strongly and is near five-year highs.
At its 52-week low, the stock hit 366p on September 8, 2023. It has since recovered 34% in six months, a decent performance for a serious FTSE 100 company.
On Friday, April 5, the shares closed at 490.4p, valuing the group at £13.4bn as Footsie stalwart. This is 2.2% below its 52-week high of 501.4p, reached on Thursday 4 April.
Here's how the Aviva share price has performed on six time scales:
| Five days | -1.3% |
| One month | 8.7% |
| Six months | 26.3% |
| To date 2024 | 12.8% |
| One year | 19.9% |
| Five years | 19.4% |
Barring a modest drop in the last week, Aviva shares have produced positive returns over five periods. They are up a fifth in 12 months, compared to +2.2% for the FTSE 100. In five years, the Footsie is up 6.4%, while Aviva has tripled this increase.
Delicious dividends
The above profits exclude dividends, which are very generous from Aviva. These are the company's payments for the last four years:
| Year | 2023 | 2022 | 2021 | 2020 |
| Total dividend | 33.4p | 31p | 22.05p | 27p |
After falling back in 2021, Aviva's dividends increased by 40.6% in 2022 and 7.7% in 2023. Additionally, the final 2023 payout of 22.3p will be ex-dividend next Thursday (April 11) for payment on May 23.
Based on its 2023 dividend, Aviva has a dividend yield of 6.8% per annum versus the FTSE 100's annual cash yield of 4%.
Is there £6 in sight?
My wife and I own Aviva shares and bought them at 397 pence per share in July 2022. Year to date we are up 23.5%, but we have also received 42.1 pence per share in dividends, of which 22 .3p will arrive next month.
Although the share price has risen above £5 by five points over the last decade, it has not reached £6 in over 10 years. That being said, I am hopeful that it can surpass this level in 2024-25. But it's not guaranteed and my hopes could be dashed.
With a growing dividend and a new £300m share buyback, it is returning billions of pounds of capital to shareholders. It could even become a takeover target by a larger rival in the United States or Europe.
On the other hand, insurance is all about risk, so sometimes things go wrong. The harsh winter of 2022-23 hit insurers, plus their shares fell as asset prices crashed in 2022. Still, we intend to hold our Aviva shares for the long term – even if they hit £6! or £7!
