Aviva Dividend History



Based on the Aviva dividend history table, below, if history is to repeat itself, Aviva is set to return to future dividend increases for the next few years. Until, the next major crisis, that is.

Year ended Interim Final Total Growth %
31 december Dividend Dividend Dividend
2010 9.50 %
2009 9.00 15.00 24.00 -27.3%
2008 13.09 19.91 33.00 0.00%
2007 11.90 21.10 33.00 10.00%
2006 10.82 19.18 30.00 10.01%
2005 9.83 17.44 27.27 7.53%
2004 9.36 16.00 25.36 5.01%
2003 9.00 15.15 24.15 5.00%
2002 8.75 14.25 23.00 -39.5%
2001 14.25 23.75 38.00 0.00%
2000 14.25 23.75 38.00 0.00%
1999 14.25 23.75 38.00

Aviva dividend history is rather erratic!

Since 2003, Aviva has been increasing its dividend pay-out. The high point in this particular dividend cycle was reached in 2007 with a dividend payment of 33 pence per share, which was maintained in 2008.

However, as a result of the global financial crisis of 2008/2009, and, in order to conserve cash, Aviva cut its 2009 interim dividend by 31.2 per cent to just 9 pence. This was followed with a further cut in its final dividend to 15 pence (down 24.7 per cent), for an overall dividend cut in 2009 of almost 27.3 per cent to just 24 pence a share. 2009 being the first year it cut its dividends since 2002.

As we can see in the Aviva dividend history table, this is unfortunately not the first time the Group cut its dividend

In earlier recessions, such as in 2002, dividends were cut by a massive 39.5 per cent, whilst in 1998 it fell by 13.5 per cent.

What is interesting though, is that when the dividend was cut, it had been to a level that allowed growth going forward.

As per the Aviva dividend history table, between these dividend cuts the dividend pay-out always increased year-on-year.

Therefore, if history is any guide than we may see dividend increases going forward. At least for several years.

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Where is Aviva's dividend growth going to come from?

Any future increases in dividend is likely to be depended on Aviva:

  • returning to overall sales growth

  • concentrating its product mix on higher margin policies

  • disposing any remaing non-core activities whilst focusing on higher growth areas

  • further securing additional operational cost savings

Half year results, 2010, confirmed that Aviva is back on track with "cash generation allowing them to continue raising dividends". 2010 interim dividend per share up by 6 per cent to 9.5 pence.

As regards to future dividend payment increases, Aviva declares on its website, under "dividend policy":

"Our intention is to increase our total dividend on a basis judged prudent using a as a guide, while retaing capital to support future business growth"

Aviva's dividend cover for 2008 amounted to 1.9 times, compared to 1.8 times for 2009, based on IFRS operating earnings after tax.

Aviva's dividend growth sustainability?

The Aviva dividend history table shows a history of dividend increases, followed by a steep dividend cut, which is then followed by several years of dividend increases. However, the dividend payment does not reaches or exceeds the previous level. A dividend cut then follows, and the dividend cycle starts anew.

Because of the apparent cyclical nature of dividends at Aviva, I personally would view Aviva as more suitable for current income generation rather than for solid long-term dividend growth.

The implication of this is that for younger Early Retirement Investors, who have more than 2 decades until they plan on living off their dividend income in retirement, Aviva may not be such a suitable candidate for their retirement portfolio.

However, this time it may be different?

The current economic downturn has ‘shocked’ many consumers into saving more, spending less and re-paying debt not only in the United Kingdom but also across Europe.

With Aviva's stated goal to focus on Europe, overall the long-term prospects for Aviva look favourable as individuals across Europe are having to take greater responsibility for their finances and retirement.

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WE WOULD LIKE TO POINT OUT, THAT:

1.the above mentioned Dividend Updates are solely examples of a UK listed company's future dividend intentions and is not to be construed as a share recommendation. Neither Early Retirement Investor nor EMAR Publishing are registered as an investment advisor or as an independent financial advisor and do not provide individualised advice

2.the price of shares and investments and the income derived from them can go down as well as up, and investors may not get back the amount they invested

3.where the information consists of pricing or performance data, the data contained therein has been obtained from company reports, financial reporting services, periodicals, and other sources believed reliable

4.data computations are not guaranteed by Early Retirement Investor.com or any of the data providers and may not be complete.

5.The editor or contributors may have an interest in the share mentioned.

6.Dividend yields move up and down. As a company’s share price increases the dividend yield falls. And vice versa: if the share price falls the dividend yield increases.

Return to Rising Dividends for announcements from other companies with an amended dividend policy.



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