Is Aviva Plc (ADR) (AV) an Exciting Emerging-Market Play?

The life insurance behemoth was forced to slash last year’s dividend by more than a quarter last year to 19 pence, rebasing the shareholder payout in an effort to reduce leverage and increase retained earnings. And brokers are anticipating this to fall again this year to 17.2 pence before recovering some ground to 17.8 pence in 2014.

Dividends for these years carry respective yields of 5.5% and 5.7%, well above the average 3.2% FTSE 100 forward average and providing a slight premium to a prospective yield of 5.2% for the rest of the U.K.’s listed life-insurers. However, with Aviva Plc (ADR) (NYSE:AV)’s full-year dividends having been cut three times since 2000, further earnings pressure should make investors fearful over future payout potential.

Aviva Plc (ADR) (NYSE:AV) was recently changing hands on a P/E rating of 7.2 for 2013 and 6.6 for 2014, providing a chunky discount to a forward earnings multiple of 12.9 for the entire life-insurance sector. However, I believe the firm’s lower rating is justified until earnings emerge on a solid footing and uncertainty over future dividends is resolved.

The article Is Aviva an Exciting Emerging-Market Play? originally appeared on Fool.com is written by Royston Wild.

Fool contributor Royston Wild has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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