Aviva share price: A good dividend stock, buy if this happens

Aviva (LON: AV) share price has wavered in the past few weeks as investors reflect on the company’s strong financial results. The shares retreated to a low of 363p this month, down by ~15% from the highest level this year.

Aviva strong performance

Aviva’s business is doing well even as the UK economic growth stalls. This was evidenced by the company’s recent results, which I wrote about here. The resilts showed that its operating profit jumped by 8% in the first half of the year to £715 million. 

Its General Insurance gross premiums written rose by 12% to £5.7 billion while its insurance, wealth, & retirement (IWR)jumped by 7% to £319 million as its cash remittances soared to £825 million.

By geography, Aviva’s business did well across all its markets, including UK & Ireland and Canada. Its IWR business is also performing well. In her statement, Amanda Blanc, the company’s CEO said:

“Aviva’s cash and capital position is robust and, in line with our guidance, we have increased the interim dividend by 8% to 11.1p, and estimate full year 2023 operating profit growth of 5% to 7%.”

Aviva, like Legal & General, is loved by investors because of its dividend payouts. It has a dividend yield of 8.50%, which is higher than what US and UK bond yields are offering. It has a robust balance sheet and the ability to continue making these payments for a while.

A key challenge for Aviva and other insurance companies is weather events. In the US, we have seen several insurance firms pull out of some sensitive states like Florida and California. 

In Aviva’s case, the company could see its payouts in Canada increase because of the recent fires in the country. This explains why the shares have underperformed in the past few months.

Aviva share price forecast

AV chart by TradingView

In my last article on Aviva, I warned that the stock would drop to ~375p. This view was accurate as the shares plunged to 363.9p recently. On the daily chart, the stock remains below the 50-day moving average, signaling that bears are still in control.

On a positive side, the shares formed a small double-bottom pattern at 363. In price action analysis, this pattern is usually a bullish sign. However, I still recommend staying away from the stock until it moves convincingly above the 50-day moving average.