Loads of traders just like the prospect of share price progress over the long run, however with regular passive earnings alongside the way in which within the type of dividends. Not solely has Aviva (LSE: AV) these days been buying and selling at its highest share price for years, however the dividend has been rising steadily. Presently the yield stands at 5.9%.

So, is the FTSE 100 insurer a share earnings seekers ought to think about?

A gradual trade, however with occasional storms

Though Aviva has been rising the annual dividend per share handily over the previous few years, that has not all the time been the case. No dividend is ever assured to final, in spite of everything. Aviva demonstrated that when it minimize the dividend per share 5 years in the past.

Insurance coverage is a enterprise sector with many fascinating traits from an investor’s perspective. Demand is excessive, resilient, and largely predictable. The enterprise mannequin is confirmed and will be profitable for a few years on the go. Because the insurer with probably the most clients within the UK, Aviva is well-positioned to learn from such elements.

Nonetheless, that power additionally exposes it to dangers. Loads of competitors available in the market can lead an underwriter to jot down insurance policies at ranges that harm profitability. That was one of many challenges for rival Direct Line, which Aviva is within the technique of taking up.

That takeover might assist develop the enterprise and provides Aviva even better economies of scale within the UK market. Nevertheless it brings an extra focus threat given the corporate’s robust reliance on the UK as its key market. It additionally dangers distracting Aviva administration’s consideration from the remainder of the enterprise.

Tons to love right here, together with the yield

With the FTSE 100 presently yielding 3.6% on common, the Aviva dividend at its present share price is over 60% extra profitable than its peer group of main blue-chip corporations. For traders with a watch on long-term passive earnings streams, I feel that may very well be enticing.

Not solely that, however the payout per share will hopefully develop over time, topic to dangers equivalent to those I discussed above. Aviva’s dividend coverage is to “grow the cash cost of the dividend by mid-single digits”.

In different phrases, annual progress ought to come back in at round 3%-7%. That isn’t within the dividend per share, however what it prices Aviva to pay. So if the agency buys again its personal shares and cancels them (because it has repeatedly carried out lately), there might be an expanded pool of money and fewer shares to divvy it up amongst. Due to this fact, annual dividend per share progress might exceed the mid-single-digits proportion enhance of the money price.

In the meantime, the enterprise appears nicely set for the long run. Share price progress of 28% over the previous 12 months partly displays Metropolis optimism about future prospects, in my opinion.

For a long-term purchase and maintain investor with a watch on incomes earnings in years and even a long time to come back due to dividends, I actually see Aviva as a share price contemplating.