AV.L – Aviva – interesting post

A thoughtful post on Motley Fool about Aviva yesterday:

I remain pretty sceptical about forecasts for Aviva they were forecasting a very high EPS for 2011 and the actual year end figure came in at peanuts.

A 5 year average is probably a sensible estimate, you can argue that 2008 and 2011 were exceptionally bad years credit crunch wise – so perhaps these figures aren’t representative. I would say though over a 5 year period i would not expect most companies to pay out dividends way in excess of earnings.And looking at stock market returns 2011 was a pretty good year.

Retained profit after paying divi – divi

2007    502,801
2008 -1,834,902
2009    293,775
2010    765,681
2011   -530,738

So in the last 5 years the company has paid £800 million more in dividends than it has earned – this probably explains the weak share price, the company is not paying a sensible level of dividends and over the 5 year period the balance sheet will probably be weaker all other things being equal. Things though will probably be ok if they do hit targets for the next 3 years.

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