This article has been adapted from Fool U.K., our sister site across the pond.

If anyone is still reading my value portfolio reports, they will know that in several tranches following cash released from profitable trades, I went heavily overweight insurance giant Aviva (NYSE: AV) in the belief that this is the biggest-value big cap I've seen for a long time. 

The principal key to this play was its absurdly high yield -- which I have been saying for a long time could not continue, though continue is precisely what it has done so far.

I have maintained, ever since deciding to unbalance the portfolio in favor of Aviva that in the end, either the dividends would be cut or the price would have to put in a serious rise. But a cut was a rather remote possibility in my view, because cut is what the company did last year. Meanwhile, that fat dividend gives me a decent return while waiting.

There was one other possibility, namely that the market could collapse by, say, 50% so that its present average of a bit more than 3% rose to between 6% and 7%. In that case, assuming Aviva's price didn't change much, which would be a very unlikely occurrence in a general market slump, then its yield would not be anything special. Like a cut, I saw this too as a remote possibility.

Viva Aviva
Yesterday, the company delivered. In its half-year results, the dividend is raised to 9.5p, up 5.6% from last year's 9.0p.

But get this bit of directorspeak: They comment that cash generation will allow them to continue raising dividends. And that on a share whose yield is an anticipated 6.7% for 2010, based on the dividend forecast of about 26p and current price of 388p. A high yield plus a rising dividend is a powerful combination.

Elsewhere, the dull accountancy stuff is not so dull, either. Sales were up and costs were down so that operating profits rose 21% with a combined ratio of 97%. The latter is an insurance-industry thing that measures claims and expenses against premiums. Anything less than 100% indicates profit. 

Cash generated rose strongly, and there were no further provisions required against poor quality corporate bonds and commercial mortgages.

Also, their exposure to dodgy sovereign debt, which was widely held, except by me, to be the reason for Aviva's prolonged depressed price, is, they claim, well within their "risk appetite." Looks like those ZZZ-rated Bongo Bongo Land bonds aren't such a problem after all.

I took a holiday in BBL once, and it's nowhere near as bad as the news might suggest. I was shot at only three times and my wife was kidnapped. Mind you, I had to put out some serious bribes to arrange that. Knowing her, I wasn't surprised that after a couple days they offered me twice as much to take her back.

Back in profit
The average price of Aviva in the portfolio is 378p including costs, and as I write, it is now finally in profit at 396p, making me £1,254 so far on the £26,202 invested, plus all the chunky dividends received. 

I'm as certain as it gets that there's a lot more to come here, so it stays in. I'm right and the market is wrong on Aviva; it shouldn't trade at twice the average yield, and it will take a sharp upward correction to rectify this.

What should it trade at on market relative yield? Good question, and I don't know the answer. This begs the question as to whether it is any riskier than shares generally, and if not, why should its yield be any higher? Views on this will vary with the prevailing mood. 

Financial shares were understandably shunned in the recession, so they would be relatively cheap. At other times, they can be relatively dear, so there is no fixed relationship of Aviva's market relative to yield. If it goes to market, that will double the price, if the latter's yield remains as now. I am not in the habit of setting targets for my value plays, so I'm not predicting any particular gain, but it's an interesting way of looking at it.

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Brian Richards prepared this article for publication on Brian does not own shares of any companies mentioned. Stephen holds shares of Aviva. The Fool has a disclosure policy.