Aviva Maintains Dividend to Yield 8%
The FTSE 100 insurer and popular high-yield punt announced first-half operating profit down 10% to 935 million pounds. Reasons cited for the setback included adverse exchange-rate movements, claims relating to bad weather, a disposal, and higher restructuring costs.
Aviva's figures were also blighted by an 876 million pound goodwill write-off relating to the group's U.S. operations.
However, the dividend was sustained at 10 pence per share.
Within the statement, Aviva revealed that its general-insurance profit had improved 1% to 461 million pounds, life-assurance profit had fallen 7% to 1 billion pounds, and fund-management profit had dropped 10% to 38 million pounds. It also confirmed that a "strategic plan" announced in July had remained on track and reminded investors of "a new economic capital level of 160% - 170% of required capital."
Aviva declared a net asset value of 395 pence per share on a standard IFRS basis, as well as 421 pence per share based on a special industry measure called "market consistent embedded value."
John McFarlane, Aviva's chairman, said: "While this has been a challenging first half, we are taking the necessary actions to improve our position going forward. This environment is likely to continue and therefore we expect second-half performance trends to be broadly similar to the first six months, but with higher restructuring costs as we implement our strategic plan."
Despite a recent rally, which has seen the price gain 20% from its summer low, Aviva's shares still look inexpensive on three basic valuation measures.
Doubling up the group's first-half underlying result gives possible full-year earnings of 46 pence per share, which would support a P/E of seven. Furthermore, depending on which net asset value figure you believe, the 320 pence shares may represent either 81% or 76% of the insurer's balance sheet. And assuming the second-half dividend follows the first-half trend and is maintained as well, a 2012 payout of 26 pence per share would provide an 8% income.
Indeed, Aviva is just one of a number of FTSE large caps that offer a dividend income well ahead of what you can expect to receive from a standard savings account. If you are seeking other high-dividend possibilities, The Motley Fool has produced a special free report that could assist your investment decisions.
"8 Popular Dividend Shares Held By Britain's Super Investor" reveals the favorite income stocks held by Neil Woodford -- the City fund manager who has thrashed the FTSE 100 over the last 15 years by favoring dividend-paying blue chips. Just click to download the special Neil Woodford report today.
Investing is by no means easy in today's uncertain economy. That's why we've published "Top Sectors for 2012" -- our guide to three favorable industries. This free report will be dispatched immediately to your inbox.
Further Motley Fool investment opportunities:
The article Aviva Maintains Dividend to Yield 8% originally appeared on Fool.com.Maynard does not own any share mentioned in this article. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.