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However, when it comes to the full year dividend, if the BOD choose to only recommend an increase of 5% on top of last years as they did for the interim, then the change in the actual cash spend would be negligible due to the lower shares in issue. To actually increase cash returned to shareholders they would need to be suggesting a10% increase on top of the 2020 final dividend.
With the current buy back programme being for approx 5% of the company, I would expect the buyback alone to impact the price by approx 5% based on the maths, however....the news that Aviva is buying back 5% of shares with a lot more £££ still to "return" to shareholders will be the driving force behind price rises IMHO
Topped up this morning 408p of course it continued to drop. I will just sit back now and at some stage be thankful that I picked more up.
The only chance of an imminent £5 sp is on news of a takeover. IMO.
If they spent the full 4 billion on share buy backs that would be 25% of the shares cancelled as aviva is valued at around 16 billion. Dividing the profit by the new number of shares would increase earnings per share alot.
I think buy backs are good. At other companies they do not seem to make a difference as they have been such a small percentage.
Even the 750 million that aviva is starting with is over 4.5% of shares. This will make a difference to the earnings per share and should increase the share price to over 5 quid in my opinion.
"The key reasons for a company choosing to undertake a share buyback may include: To return surplus cash to shareholders. A company may have surplus cash as a result of outstanding profitability, the sale of a business or having cash in readiness of a potential acquisition or planned expansion that has fallen through"
Like to know you views, I see it as management pumping up the share price to pad their own returns rather than returning cash.
Many companies buy back their own shares when times are good = higher share prices and have rights issues when times are bad = lower share prices.
It is not what i like to see from the managers but most companies are doing it these days.
Cheers casual investor. If that's how it pans out with a slight increase in dividends then it's worth it. Never seems to be reflected in share price though
As the shares are cencelled then the earning per share increases ever so slightly, when it comes to dividend time these will be slight higher as a result of fewer shares in the market.
I own shares in av. vod and ulvr all of which are carrying out share buybacks. Unfortunately all of which also seem to have zero positive effect on the share price.
Pointless process??
Should we be buying shares in European insurers? One Wall Street bank thinks so.
There are still a bunch of reasons to buy share in Europe’s big insurers, which remain in bargain basement territory.
That at least is the opinion of the financials team at JP Morgan, which pointed out the sector trades at 35% discount to EU markets.
And this is after 84% of companies tracked by the American bank delivered better than expected first half earnings.
JPM also pointed out that the EPS momentum will likely continue into the second half, while the brimming coffers of insurers means that special dividends and buybacks are on the menu.
At the same time the general pricing in the sector (the ability to get prices rises through) will likely to be supportive of those operating in the industry.
“We remain optimistic about the performance of the insurance sector into yearend, which has been observed since mid-year and is largely driven by a better-than-expected [first-half] results season,” JPM said in a note to clients.
In the UK, its top picks are Aviva PLC (LSE:AV.) (LON:AV.) and Beazley Plc (LON:BEZ), which are both rated ‘overweight’ by the bank
I think they'll be a 1 billion pound buy back after this one is done
Thats why I said March,thats when they announce their FY results.
Hi DS. Not necessarily, GI although it provides the funds to invest it also carries risk. Insurers such as LG and Aviva seem to be looking more at bulk purchase annuity and have been for some time. AIMO of course. Just happy to see the price moving and Aviva looking to change.
The current buyback will complete before final results. There is no reason why they could not announce another buyback at full year.
no we already know. £4 billion will be returned to shareholders and they are spending £750 on a share buyback programme. This leaves 3.25 billion to return. If it's a special dividend across 3.990 million shares then that's 81.5p each. This figure will increase the more shares they are able to buy back.
However the share price will also reduce by the same amount on the ex dividend day as it is already fully built into the current share price. The only question will be when do they make the payment.
I guess we will have to wait until March to find out what the goodies are.
Selling GI would feel like hollowing the business from the core. The silver is sold, that'd be selling the soft furnishings and decor!
Is it time to take a further look at Aviva PLC (LSE:AV.) (LON:AV.), the insurer that has started to splash the cash?
According to the highly respected financials team at Deutsche Bank (NYSE:DB), absolutely yes it is – notwithstanding the 32% total return investors have seen in the year to date.
In the wake of the recent numbers, Aviva has provided “reassurance and clarity”, according to Deutsche, which remains a ‘buyer’ of the stock up to 500p (current price 420p).
Its analysts were heartened by the £4bn capital return pledged by mid-2022 and the assurance the figure was “floor not a ceiling”.
That capital return is kicking off with a £750mln stock repurchase scheme.
Details on the rest of the cash return pledge will be unveiled in the group’s full-year results.
The interim results last week were a mixed bag. However, there was nothing in them that deterred the Deutsche number crunchers.
Pete640, I think there will be a special divi but not sure it will be as big as some think. As with all dividends once the money leaves the company the share price usually reflects this by the same margin. If AV are to buy I would be surprised if it's a General Insurer, more likely a pensions business or a merger with one of the bigger pension players.
PBoyd like you I don't think buybacks do anything for the share price and don't particularly like them. As you suggest Cevian seem to want more control and are putting their money on the table to achieve this.
Been and will continue to be a LTH myself . I still wouldn't be surprised if they sell the GI side and concentrate on pensions, maybe buy someone with the existing cash plus whatever they achieve from a GI sale. All speculation on my part of course. I am please though that AB has at least got hold of things and seems to slowly be turning this supertanker around!
I can see that in the NY, she's being a little too coy at the moment, meanwhile I think Cevian is building their holding so as to 'influence' from a strong hand.
Buybacks do nothing for the shares, the IIs win. Look at BP, share price weaker than ever and they are buying back billions.
Jake,I see a special divi of 15p in 3 months time. Plus possible buyout of another main U.K. player in Insurance / pensions? Maybe AXA or Direct Line.?
Hi DS. I wonder if they will sell off the General Insurance side of the business and concentrate on pensions and investments. It's been talked about for years. Time will tell I guess.
For those interested, as of yesterday's RNS, Aviva have completed £91.5m of the "up-to-£750m" share buyback programme.
IMO - Aviva are cancelling all shares purchased under the buyback and so reducing the shares in circulation, increasing the value per share in the process. Aviva will keep buying up this low hanging fruit until exhausted, but I'm expecting the final dividend return per share to reflect the more smaller pool of shareholders.
Leadership under Blanc is so much stronger than Tulloch. The next step is critical into 2022; I can't see Aviva buying out anyone significant after current disposals unless they do another Friends Life type deal. There's no more family silver to sell. So what's the next move going to be?
Hmmmmm