Aviva set to reveal plans for dividend rise for thousands of shareholders

Aviva will this week reveal plans for a dividend rise for thousands of shareholders after a sweeping overhaul of the business. 

Amanda Blanc, chief executive of the FTSE100 insurer, will map out a growth plan that will see the dividend jump next year for its 540,000 shareholders. 

Cash flow: Analysts reckon Aviva could generate £1.3billion of free cash flow in 2023

Analysts reckon Aviva could generate £1.3billion of free cash flow in 2023, which could mean a dividend per share of as much as 45p – up from the 21p paid for 2020, and the anticipated 22.5p for 2021. 

However, companies rarely pay out all of their cash, as they tend to invest a chunk in the business and keep some in reserve in case the economy takes a knock. 

The Mail on Sunday revealed last month that Aviva was also preparing to return more than £5billion to shareholders in the form of a special dividend and share buyback. 

Investors will be watching the dividend closely as most hold Aviva as an income-generating stock. 

Blanc, 55, has shrunk Aviva’s sprawling empire by selling off overseas businesses to focus on the UK, Ireland and Canada. 

One analyst said: ‘There is significant room to grow the dividend. There’s a disconnect between its cash generation and dividend policy. Of course that’s the capacity, but companies like to hoard cash’. 

Aviva has come under pressure to return more capital to shareholders after Cevian, the largest activist investor in Europe, took a stake last year. 

The insurer is also set to reduce the number of shares in the market, which should support the price and the dividends per share.