Aviva's Bureaucratic 7.8% Yield

LONDON -- The shares of Aviva (LSE: AV.L  ) (NYSE: AV  ) advanced 4 pence to 332 pence during early London trade this morning as investors sought a 7.8% dividend yield from a company that has admitted to suffering "more bureaucracy than desirable."

The confession from the FTSE 100 firm was contained within a third-quarter statement in which the composite insurer claimed it had "been more used to collective decision-making and has moved more slowly as a result."

Ironically, Aviva's statement today also revealed no fewer than nine "specific transformation programs" as part of "firm and decisive action" to transform the group.

The nine programs outlined today -- "Backing Winners," "Cost and Capital Efficiency," "Back Books," "Life Excellence," "GI Excellence," "Assets/Aviva Investors," "Product Tails," "IT and Operations," and "Performance Ethics" -- were in contrast to a statement published in July. Back then, the blue chip outlined a "new strategic plan" that had only three broad objectives: "Narrow Focus," "Build Financial Strength," and "Improve Financial Performance." During April, Aviva announced plans to just "simplify and grow" through a rejigged management structure.

Whether the latest scheme -- involving "amber cells" and a "nine-box performance and potential matrix" -- actually transforms Aviva remains to be seen.

Meanwhile, Aviva did say this morning that "trading conditions remained difficult and results have been mixed across the group." The firm also declared net asset values of 397 pence and 446 pence per share, which means the shares may represent between 74% and 84% of the balance sheet, depending on your accounting preference.

Current City earnings estimates for 2012 range between a 10 pence per-share loss to a 61 pence per-share profit, suggesting that even the experts aren't really sure about Aviva's progress and transformation programs.

At least the trailing dividend is still 26 pence per share, which should provide a 7.8% income. But whether that high yield is enough to make Aviva a buy remains your decision.

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Maynard does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


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