Dividend shares may also help construct wealth, however the most effective ones usually are not simple to establish, in my opinion. There are many issues to think about. The largest level for me is that dividends are by no means assured.

I need to take a better take a look at Aviva (LSE: AV.) as doubtlessly probably the greatest on the FTSE 100 index.

It operates within the monetary companies business, the place I perceive there are dangers, however juicy rewards available too.

Let’s take a look at some current developments, fundamentals, and dangers forward that can assist form a solution to my opening query.

Newest information

Aviva right this moment introduced interim outcomes for the six months ended 30 June 2024, they usually made for good studying.

Gross sales throughout its insurance coverage, wealth, and retirement divisions rose by 12% in comparison with the identical interval final 12 months. Plus, insurance coverage premiums elevated by 15%. Working revenue got here in at 14% increased, and its interim dividend was hiked by a powerful 7%.

Regardless of financial turbulence being a serious menace, Aviva appears to be thriving. I can’t assist however marvel how the agency could fare in greener pastures.

Fundamentals and future outlook

Beginning with returns, a dividend yield of seven.3% is considerably increased than the FTSE 100 common of three.6%.

Transferring onto valuation, Aviva shares look wonderful worth for cash on the 2 fundamental metrics I exploit to gauge worth. They commerce on a price-to-earnings development (PEG) ratio of 0.5. Any sub-1 studying signifies worth. Moreover, the shares commerce on a price-to-earnings ratio of 12, which is near the index common, however nonetheless good for what I think about a implausible firm.

It’s exhausting to disregard Aviva’s model energy, monitor report, and talent to generate money hand over fist. This might result in continued investor rewards, development to spice up earnings, in addition to share buybacks. For instance, demand for wealth, insurance coverage, and retirement merchandise is barely rising within the UK, Canada, and Eire, all its core territories.

Dangers to notice

Regardless of navigating the present financial turbulence effectively, as proven by interim outcomes, continued strain may impression earnings and profitability. Shopper spending on non-essential merchandise resembling wealth administration or life insurance coverage, might be squeezed. That is one thing I’d regulate.

Maybe a smaller difficulty I’d bear in mind is that of intense competitors available in the market. Nevertheless, Aviva’s attain and model energy may negate the specter of this difficulty.

My verdict

Taking every little thing into consideration, I do suppose Aviva shares characterize probably the greatest dividend shares to assist construct wealth. A pretty market place, good fundamentals, and thrilling future prospects assist me come to my choice. Dangers talked about may harm the agency, however the execs outweigh the cons for me.

If I had some spare money right this moment, I’d like to snap up some shares.