Arriba Aviva!

Aviva @ 468.5p, +4.1 (+0.88%) as at 10:24


Through a combination of communications, results and credibility, Aviva is starting to romp on now.
After outlining its intentions last year with a 3 stage plan, it does appear to be delivering. This came through in communications to major investors in January and further evidence shone through in last weeks results.


In the results, the company reported:
- profits before tax had increased by 35% to £2.44bn (£1.81bn) equivalent to £1.0049 per share
- profits after tax up by 43.8%, to £1.892bn (£1.315)
- £149m of costs taken out of the business bringing the 3 year cost reduction total to £750m.
- UK life and pensions sales up 15%
- European sales up 13.5%
- Group life and pensions sales up 12.5%
- UK General Insurance business up for the 4th successive quarter
- market share up to 11.1%
- final dividend declared at 16p bringing the total for the year to 25.5p (24p), + 6.25%.
- dividend cover of 2.16 times.
- cash balances of £25.455bn.


At this level my investment has given me a 24.5% gain on the share price plus a further return from dividends received of 1.2% giving a grand total of 25.7%
But, including the final dividend of 16p per share (ex.dividend 23 March) would bring the total gain to 30%.


Interestingly using the consensus forecasts for the dividend of 27.09p, for the year 2010 - 2011, would give a dividend yield of 7.2% against my average purchase price. 
So potentially thats an annual 7.2% return (against my original investment) from the dividend alone in addition to the 25.7%/30% already anticipated and any further capital gain that might be realised.
Question is: Why haven't I got more of them?
Of course these are just analysts' consensus forecasts and subject to change, and any number of things could happen to global markets.


Amongst the brokers, Nomura (sharecast.com: Broker snap: Aviva to grow earnings in 2011), believes that cost cutting and higher margin business has boosted the profits and that a 9% improvement can be achieved in the coming year giving it the confidence to set a target of 650p for the shares. I always said that Nomura was my favourite broker!!!!!


Arriba, Aviva!