After a gradual begin to the 12 months, shares in insurance coverage large Aviva (LSE: AV.) have been choosing up tempo. They’re up 9.1% 12 months so far and 19.1% during the last 12 months.

That beats the efficiency of the FTSE 100. If I’d picked up shares in Aviva a 12 months in the past, I’d be a cheerful investor at this time.

Sadly, I didn’t. However with its share price now at £4.73, I’m tempted. That appears low-cost. Would I be foolish to not purchase the inventory? And will traders think about it too?

Standout options

From my research, a couple of issues stand out to me. The primary is its meaty dividend yield. At 7.1%, that’s manner above the Footsie common (3.6%). Final 12 months its dividend grew by 8%. That’s the third 12 months in a row it has risen. To go together with that, administration additionally introduced a brand new £300m share buyback programme whereas upgrading its dividend steerage shifting ahead.

Dividends are by no means assured. So, once I see yields of seven%+, I’m naturally sceptical. That mentioned, I really feel Aviva might be paying out in future given its strategy to rewarding shareholders over the previous few years.

Then there’s its valuation. At this time, it has a price-to-earnings ratio of 12.5. Okay, there are cheaper shares on the market. However I believe that appears like good worth for Aviva. It’s a high-quality enterprise, so regardless that that’s barely above the Footsie common, it nonetheless appears like an excellent deal. Its long-term historic common is round 14, additional signalling there’s worth in at this time’s price.

What subsequent?

However what’s in retailer subsequent for the enterprise? 2023 noticed it proceed to achieve momentum. Working revenue rose 9% to simply shy of £1.5bn, boosted by a robust efficiency throughout a number enterprise areas, akin to wealth and insurance coverage premiums. It additional delivered its £750m value discount goal a 12 months forward of schedule.

However how does it take the following step and kick on from right here? Fortunately, it appears that evidently persevering with to streamline the enterprise and make it a extra lean and environment friendly operation is the highest precedence for CEO Amanda Blanc.

Up to now, Aviva has usually been seen as a enterprise that was too diversified. It centered on too many areas in too many areas. And this harmed efficiency. Beneath Blanc, this has modified.

In its newest outcomes, it introduced that it had accomplished the exit from its Singapore three way partnership for £937m, additional decreasing its geographic footprint.

These strikes construct on the already sturdy aggressive benefit that Aviva has. That features its stellar model recognition and buyer base of practically 20m.

The dangers

Whereas that’s all nicely and good, streamlining comes with dangers. For instance, it leaves the enterprise reliant on simply a few markets. In the event that they falter, Aviva will really feel the impression extra strongly than if it was extra diversified.

The insurance coverage business can be cyclical in addition to extraordinarily aggressive. Insurtechs have been gaining recognition in recent times. That’s a growing risk to Aviva.

Time to purchase?

Even so, I’d purchase the shares at this time if I had the money. At £4.73 a pop, I believe they’re a shrewd funding proposition and supply long-term development potential.

Its meaty yield is definitely one of many main attracts. That would offer a strong passive revenue stream for my portfolio.