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The theoretical "write down" on your investment will be offset by the cash payment you will receive for the B shares.
The big unknown is whether or not the buyback/B shares issue will have an impact on the share price - as many (myself included) do not count cash in the bank as part of a companies valuation.....in fact I am sure very few shareholders know how much cash is in the bank for their investments - it is all based on profit earned per year, and anticipated profit for the future.
I think we will see a large portion of the B share revenue put straight back into Aviva shares driving the share price even higher.
Aviva is currently worth £16 billion (approx.)
£3.7 billion is being returned to shareholders through the B share scheme (there are 3.7 billion shares in issue approx.)
Giving £1 to all shareholders removes the funds from the bank account and "theoretically" it could be said that Aviva's market cap drops by this amount, giving a new market cap of £12.37 billion. To maintain the price per share as it currently is (approx. £4.35) the shares are consolidated so that you retain approx. 77% of the number of shares you have - but the same portion of the company - therefore your dividend % should remain unaffected. The difference being that you also have £1 cash for each of your shares. If you wanted to increase your holding, you can use the proceeds of the £1 return to repurchase Aviva shares and increase your holding - hope that helps.
As always DYOR, this is my understanding, but I may be wrong!
As mentioned earlier in the chat, there is information regarding the circular in the RNS this morning
B Share Scheme and share consolidation
As announced with our full year Results on 2 March, we intend to return £3.75bn of capital to shareholders via a B Share Scheme, together with a simultaneous share consolidation. This is in addition to the £1 billion share buy-back which was completed on 31 March 2022. We expect to publish full details of the Scheme and share consolidation in an explanatory circular on 5 April.
Apologies, I was looking at the record date! - You are correct, ex divi is the 7th - so one week to go
Today is the last day for buy backs, "The Programme commenced on 13 August 2021 and will now complete no later than 31 March 2022" so are we going to see another large purchase from Aviva today? (was 2,000,000 shares yesterday)
I still firmly believe a lot of the coming activity (dividend, b share, consolidation) is not priced in at current levels and anticipate a 20/30 pence rise from where we are ahead of the ex divi date (8th April) next Friday.
As the daily volume of the AV buybacks drops, the market price continues to grow, showing general "buy" sentiment in the market for this in the lead up to the ex divi date (April 7th). I anticipate the share price to be close to £5 before the dividend payment and return of capital take place.
With a number of brokers/investors/websites listing Aviva as a Buy, are we going to see the price push close to £5 in the next 7 days in the run up to the results announcement?
Still a lot of capital to be returned to shareholders, personally I think holding out for the March results it the smart move, but I have no plans to "get out" this is in my dividend portfolio inside my pension....which I cannot claim for another 25+ years
I think the thing you are missing is that Aviva has paid out 61.35p(14.28% of current value) in that time in dividends, which is what makes this an income share not a growth share. Had the BoD not paid dividends, but instead completed buy backs or debt paydown the SP would not have "dropped" on/after the ex divi date and this would be over £5 easily.
Aviva is a steady and stable 6% yield income share, not a huge growth share.
Yes, meaning they do not want any news or rumours to come out until then.....as it will impact the share price and they are trying to buy back as many as possible
A 2% special dividend is nice, but the value of the NEXT shares (nearly £80 each) make the £1.60 SD seem like a lot compared to Avivia's divis.
I think there is an Aviva SD to come, but news of it will be kept under lock and key until the buy back has been completed - the board do not want the share price to go up while they are still buying shares!
It will be an efficient profitable dividend stock :)
With a 5% yield or higher per year, I will be happy
I do not anticipate any excitement until March 2022, however I am expecting a special divi payment to coincide with a consolidation exercise
I think the buyback is being managed in a very shrewd way, AV are only buying the shares when there appears to be selling pressure as they can pick them up at around £4. The public appear to be waiting for a raise in share price to indicate "good news" and the buyback strategy appears to be keeping the price "level" - allowing AV to buy back more shares!
I am expecting to see a significant increase in the buying pressure from the buyback towards the end of the programme which in turn will start a bit of a bull run on the price and see AV up near £4.50, allowing a special divi to be paid but the price to remain over £4
Just my thoughts, but I am interested to see how this pans out
Annual dividend set to grow as number of shares is reduced, potential 65p+ dividend in 2022 makes this a great share for the pension pot or for long term holders looking for safe income rather than large growth
I have some crypto in my investments, have done for years, mined a lot of ETH back in the day....but I digress.
There is an old saying about "eggs and baskets" which I apply when considering Crypto such as Bitcoin and as there are no fundamentals to them, there is a huge risk of bubble burst in the future, so I am not going to bet my pension pot on it!
Buybacks with share cancellation reduce the number of shares in issue, when it comes to dividends, there are fewer shares in issue, so the payment is split across fewer shares which ultimately means more for each shareholder, it may only be a fraction of a percent, but it all adds up - going forwards if the dividend yield grows 1%-2% per year I would be very happy!
The share buyback is better for long term holders than traders, Aviva ideally wants to keep their share price stable and pay good dividends, which attracts long term investors rather than traders!
Share price increased when the deal was announced, it is not usual for the share price to rise when the money lands in the bank....as there was no doubt that it would!
Also a factor to consider is that AV have a lot of cash in the bank at the moment, which again will be factored into the share price.
What I think we will see is new investors seeing the recent rises, the share buy back and large cash reserves information and start to put their money here, which will grow the price.
AV are doing a very good job of managing the buyback without massively increasing the SP, the cheaper they can buy them, the more they can get and ultimately the fewer shares are in issue, so when the price does rise it would rise quicker due to fewer shares in circulation.
I didn't think Amazon and Aviva were both in the same industry!
If you want to exit as a shareholder once and for all, sell your shares!