Aviva Share Discussion Threads

[smurfy2001] 07/3/2019 16:09

With the 30p dividend taken into account along with my buy price the yield is 7.05%.

It's the highest paying and highest yield in my portfolio.

Therefore the share price to me is very good value.

[alphorn] 07/3/2019 14:44

Added to my long position just now; albeit at a lower strike.

[dround87] 07/3/2019 12:08

Yeah it's looking like a hold to me. Nothing scary. No fireworks. Untested CEO. It got built up ahead of results by the tipsters. Dropped as to be expected. Probably more to come. I'm not going to sweat it. Maybe things will turn around if the markets scent a second referendum but we're looking at lean times otherwise in 2019 IMHO. There are worse plans than holding big, safe companies with good divi yeilds. Trying not to buy too heavily into the brexit discount on the AIM/small cap right now!

[whatsup32] 07/3/2019 12:06

Hargreaves Lansdown

‘Maurice is odd choice if the board wants to shake things up. He’s been with Aviva 27 years and pledged to cut debt and focus on insurance ‘ ‘hardly setting world on fire’

‘Aviva more of the same’

It’s a fair assessment, I’ve said he probably wasn’t their ideal choice

[smurfy2001] 07/3/2019 12:02

And Morgan Stanley.
11:51 am
BE
Previously guidance was for the payout ratio to expand to be in the range of 55-
60% by 2020 - the payout ratio for FY18 was 51.4%.
Looking at Bloomberg consensus, the market expects 7.0% EPS growth in FY19
and 4.5% growth in FY20 - with the implied payout ratio in each year being 53%
and 57% respectively. For FY21 - earnings expectations flatten, but the dividend
payout expected is ~58%. If we assume 3% p.a. EPS growth (roughly in-line with
the organic EPS growth in FY18) over FY19 and FY20 this would suggest a FY20
EPS of 61.95p (5.3% downgrade for cons) and then the applying the FY18 payout
ratio of 51.4% would give a FY20 DPS of 31.84p (14.1% downgrade).
We believe that this could be a 'worst case' assessment as the progressive
dividend policy will see "the dividend maintained or grown over time depending
on the business performance and growth". However, decomposing the 7% EPS
growth for FY18, just under half of this is organic while the rest is from the
buyback, debt reduction and assumption changes. It is likely we believe the
market settles for a low single digit EPS outlook.
11:51 am
BE
Hope that clarifies things.

[smurfy2001] 07/3/2019 12:02

BE
And Barclays.
11:49 am
BE
Aviva reported operating earnings of £3,116m, 1% ahead of consensus of £3,095m (Barclays £3,009m), with life insurance (4% ahead) and general insurance (2% ahead) both ahead, offset by lower asset management (6% miss) and higher group central costs (14% ahead). The beat was primarily driven by higher longevity releases in UK life, with UK management actions £350m (£90m higher YoY). The company is increasing the dividend by 9% to 30.0p, in line with consensus and equivalent to a 6.9% yield. The company has changed the dividend policy to a progressive policy, focusing on maintaining the dividend or growing over time “depending on business performance and growth prospects”, moving away from a payout ratio (50 to 60%). The company has also indicated that it will focus its capital deployment on reducing debt (by at least £1.5bn) by the end of 2022, saving £90m in interest expenses and lowering debt leverage. This would add c1% to earnings growth in each of the next three years.
As we said in our November 2018 note “EPS not DPS cuts required”, we did expect a rebasing down of EPS and forward DPS growth, but we did not expect the dividend itself to be cut, and today’s results are in line with that view. That said, the magnitude of negative EPS revisions is likely to be larger than we expected (not going from mid single digit to low single growth, but a rebasing lower of 2019 EPS). The CFO has effectively warned on 2019 EPS, saying in his outlook statement “Given current uncertainties, including the unknown future impacts of Brexit on the economies of the United Kingdom and Europe, our near-term outlook entering 2019 is more muted than our outlook a year ago. While we achieved 7% operating EPS, growth in each of the past two years, it will be difficult to sustain this momentum in 2019.”
11:49 am
BE
In our note last week (1 March 2019) “Radical change to add value”, we argued that the next CEO of Aviva, whoever that might be, needed to enact radical change in order to unlock value in Aviva and to be ceased to be viewed as a value trap. While an external candidate was much more likely to go down this path, we would not rule out Maurice Tulloch also releasing value, and in the outlook statement, the company has left the door open to asset disposals, stating “Our challenge is to capitalise on these strengths to become a better, simpler, more efficient company known for excellence in serving customers. This will require significant improvements by Aviva. It will also entail choices with respect to resource allocation.”
11:50 am
BE

[smurfy2001] 07/3/2019 11:52

From FT:


Aviva PLC (AV.:LSE): Last: 416.97, down 16.33 (-3.77%), High: 428.10, Low: 406.00, Volume: 9.22m
11:43 am
BE
Divi's the problem. Moving to a progressive policy.
11:44 am
BE
Which is likely to mean a cut versus the previous EPS-linked policy.
11:45 am
BE
9% divi growth in 2018 turns into 5% growth going forward, probably
11:46 am
BE
Otherwise, everything's in line and the messaging is sensible. Debt reduction plus "emphasising the fundamentals: customer service, distribution, product mix and pricing, and managing expenses.”
11:46 am
BE
Yet so see a CEO stand up and say "sod the customers and sod the product, we'll be making things unnecessarily complicated" but whatever I guess.
11:47 am
BE
Here comes Goldman to make sense of it.
11:48 am
BE
Dividend: Commitment to the current dividend (+1% vs. consensus) and
nmovement to a progressive dividend going forward (versus a pay-out ratio previously). In this context, management has stated that future percentage growth rates of the dividend per share will be more modest than those in the recent past.
11:48 am
BE
Balance Sheet: Debt reduction of £1.5bn by 2021/2022, which is expected to
ngive a pro-forma leverage ratio of 29% (vs. 33% currently). This will have a mechanical impact on Solvency II coverage, however, we note that after strong capital generation and modelling impacts (from the roll-out of DVA in France, Poland and the UK) in 2H18, the group is unlikely to move outside of its (revised) target range 160% to 180%.
11:48 am
BE
Earnings Growth: EPS momentum in 2019 alone may be tempered from the
nhistorical 7% growth due to tax changes, evolving business mix, lower opening balances (following recent adverse market movements) and the impact of potential disposals (per Aviva, Friends Provident International).
GS view: Overall, we see this as a strong set of results. The key messages around the dividend security and balance sheet restoration (notably de-leveraging) should be taken as a significant positive. Today’s dividend announcement (30 pence per share) equates to trailing yield of 7.0% which is the highest ordinary yield of any European multi-line insurer. This yield should also grow in-line with the group’s operating performance, but is a progressive dividend meaning downside risk is removed. While there are some one-off headwinds to 2019 earnings growth, given weak capital markets in late-2018, we expect investors to focus on the favourable messages on both dividend and balance sheet progression.

[zho] 07/3/2019 11:47

Discussion at

[woodhawk] 07/3/2019 11:44

Managed to add again at 409. Bargain!

[adejuk] 07/3/2019 11:28

bought at 415.

[whatsup32] 07/3/2019 11:21

Current interest rates 0.75% . Bank will give you say 0.5% ,

Aviva yields 7% and should gradually increase .

Small capital loss risk , reasonable to expect capital gains too.

I will hold and sleep comfortably

[this_time_its_different] 07/3/2019 11:01

I am prepared to buy this all the way down if I have to.

[dr biotech] 07/3/2019 10:58

I doubt brexit will be forgotten. We are only just beginning to see the damage that is going to be caused. Has any FTSE350 company come out and said they are expecting a brexit boost?

Has to be said I’m disappointed at the so reaction today. Lost most of the final dividing capital

[smurfy2001] 07/3/2019 10:54

If there's no movement on the backstop then I'd suggest MPs would vote on an extension to article 50. I'd suggest that would be temporarily bullish for the markets.

==

Live Brexit latest news: EU gives UK 48 hours to come up with new plan for backstop to break deadlock

[this_time_its_different] 07/3/2019 10:45

Aviva has the better risk/reward right now. In 6 months time, people will forget about brexit.

[adejuk] 07/3/2019 10:44

i have a pot of cash and can't decide on more aviva or lgen

[this_time_its_different] 07/3/2019 10:41

Aviva is selling off because the market thinks the dividend won't grow now, which is not true. Bar recession, it will grow, probably not as fast as before though.

[porsche1945] 07/3/2019 10:37

I agree, brexit a disaster for the self harming uk but too many knuckle draggers allowed to vote in stupid referendums hence we end up getting dragged down with them, Cameron should be strung up.
On Aviva, its a value trap, same as direct line, phoenix L and G, most of ftse 100, dividends only, Aviva has always been a poor company tho, need a takeover or someone like Elliot to take a position.

[adejuk] 07/3/2019 10:35

point taken

[da vinci1] 07/3/2019 10:31

adejuk-'I think that's a profit warning'. No, it's a profit growth warning amid Brexit uncertainty. This is another example of the enormous damage being done to the economy. We need to stay in the EU. Mrs May needs to 'listen' and put the country first before party politics and call for a new referendum ASAP!!

[stewart64] 07/3/2019 09:42

Edmundshaw..the bullish forecasts were for basic EPS. Whichever measure you look at we are up around 10% only on earnings. We were set up to be disappointed by those forecasts.

Still looks cheap, but then it's been decreed that UK stocks with solid balance sheets are cheap and US tech stocks must have a return that might pay back by the the end of the world if you are lucky.

[this_time_its_different] 07/3/2019 09:33

there is NO profit warning, all aviva is saying EPS rising will not grow like the last few years, so expect a dividend but one that grows slowly. Who else is going to give you 7% today outside of the j-un-k bond market? No one.

[redsquirrel3] 07/3/2019 09:32

That's a good start Mr Tulloch! Paying down debt and reining in future Dividend payouts. Surely in this extended period of historically low Base rates,circa 0.5%, servicing interest payments on debt can't be anywhere near the 7% being paid out in share dividends! It surely therefore would make much more sense to buyback and cancel shares wouldn't it? Come back Mr Wilson,all is forgiven! The share price is being hammered today when it should have been breaking above £4.50 per share!

[adejuk] 07/3/2019 09:21

i think that's a profit warning