One dividend stock I think could be a great buy right now to boost passive income is Aviva (LSE: AV.). Here’s why.
Financial services products
Aviva is one of the largest insurance companies in the UK. It also provides a range of other financial services products including savings and retirement products. As well as the UK, it has international operations across Europe and Canada.
So what’s happening with Aviva shares currently? Well, as I write, they’re trading for 383p. At this time last year, they were trading for 397p, which is a 3% drop over a 12-month period. More recently, the shares have fallen 17% from 462p in March to current levels.
I believe Aviva, and many other shares, have fallen in recent months due to macroeconomic factors. Strong inflation, rising interest rates, and a cost-of-living crisis have all contributed. The tragic events in Ukraine have also not helped the markets.
Why Aviva is a great dividend stock
There are a few reasons I like the look of Aviva shares. To start with, it has an excellent profile and position in its respective markets with a presence internationally too. In addition to this, the business is structured into four main divisions, all of which are aimed at growth and boosting its performance.
Next, Aviva’s products are in high demand, in my opinion. This is especially the case for its retirement and life insurance products. This is because ageing populations throughout the world are looking at such products to protect them in the future. This heightened demand can be leveraged into boosted performance and increased shareholder returns.
Looking at Aviva’s fundamentals, the share price dropping has presented an opportunity to pick up shares more cheaply than usual. At present they’re trading on a price-to-earnings ratio of just seven, which is below the market average.
Finally, Aviva’s current dividend yield stands at 8.8%. This is nearly three times the FTSE 100 average of 3%-4%. I am aware that dividends are never guaranteed and can be cancelled at any time by the business.
My verdict
I must note some real risks associated with Aviva shares too. The current economic outlook means that consumers may have less disposable cash to purchase non-essential insurance products. This could impact performance and payout. Personally, I think this is a short-term issue and I’m prepared to overlook it as I invest for the long term.
Another thing to consider is that the financial services market, especially insurance, is a very competitive one. Aviva has a great reputation and profile already. It is also investing heavily into digital channels to continue to attract new business, which should boost performance and investor returns.
To summarise, I believe Aviva is an excellent dividend stock that would boost my holdings and provide me with excellent passive income. I would be willing to buy some shares if I had the spare cash to do so.
