RBC Capital Markets lifted its price target on Aviva to 510p from 420p on Tuesday.
“Given its strong capital generation, we expect that Aviva can balance enhanced shareholder returns and reinvestment into growth – an area that has historically been a key concern for investors,” the bank said.
“Our analysis of Aviva’s balance sheet indicates that not only can Aviva undertake buybacks of up to £450m per annum, it can generate growth to support a long-term dividend per share compound annual growth rate of 4% per annum.”
RBC, which reiterated its ‘outperform’ rating on the shares, said this results in Aviva offering a sector-leading cumulative total capital return yield of 33% over 2022E-24E.
“Despite this, Aviva’s dividend yield is 14% higher than its historical average,” it added.
At 0940 BST, the shares were up 2.6% at 436.40p.
