Aviva share price falls to key support: Is it a good stock to buy?

Aviva (LON: AV) share price has been in a deep slumber as concerns about the UK continued. The stock was trading at 389p on Wednesday, a few points below the year-to-date high of 445p. In all, the shares have jumped by over 133% from the lowest level in 2020.

How safe is Aviva’s dividend?

Aviva is a leading British company that has been implementing a turnaround strategy. As part of this strategy, the company has recently exited its key markets like Italy, France, and Poland.

The company is now focusing on its UK and Ireland businesses where it is providing services like insurance, wealth, and retirement. While the UK economy is underperforming, the recent results showed that the company was doing well.

The company’s wealth business had over £5 billion in inflows in its wealth business. Its fund generation jumped by 37% in the first half of the year while its operating profit rose to £2.2 billion. The company is also slashing costs across the board in a bid to boost its profitability. Its cost-cutting measures saved the company over £50 million in the past quarter.

Aviva is also highly friendly to investors. It returned £4.75 billion in capital to investors through dividends and share repurchases. The company also initiated another £300 million share repurchase program and boosted its dividend payouts.

These are strong numbers considering that the British economy went through major headwinds in 2022 as inflation jumped to a multi-decade high. As with all companies, Aviva was affected by these inflationary trends in the country.

Aviva seems like a good investment because of its strong dividend, which is yielding about 7.5%. It is also a leading company with a strong market share in its key units. Also, Aviva is a relatively cheap company that has over £2.2 billion in operating profits and a market cap of over £10 billion.

AV chart by TradingView

The weekly chart shows that the Aviva stock price has been in a slow downward trend after peaking at 445p in March. The shares have formed an ascending channel that is shown in green. They have now moved at the lower side of the channel.

The stock has moved below the 100-week and 50-week moving averages. Therefore, the outlook of the stock is neutral for now. A move below the lower side of the channel will see it continue falling in the near term. The alternative scenario is where the shares bounce back to the upper side of the ascending channel at 445p.