Should I buy Aviva shares for the big dividend?

Aviva (LSE: AV.) Shares are popular with income investors and it’s easy to see why. Today, the sport is one of the highest dividend earners in the world FTSE 100 index.

Should I buy Aviva shares with huge dividends? Or are there better stocks to buy for my portfolio today? Let’s have a look.

Aviva in solid form

The latest results for the insurance company’s third quarter in 2022, show that it is solid now.

For the first nine months of 2022, gross written premiums for general insurance (GI) increased by 10% year-on-year to £7.2bn. And GI’s combined operating ratio – a measure of profitability used by insurers to measure day-to-day operating performance – was strong at 94.3% (92.4% a year earlier).

For the wealth division, the net flow for the period was 6% of the opening assets under management (AUM) at the beginning of the year.

Trading is positive and our performance continues to be strong. We’ve had a good nine months thanks to our market leading position, customer focus and the clear benefits of Aviva’s diverse businesses across insurance, wealth and pensions.

Aviva CEO Amanda Blanc

Meanwhile, in a trading update posted earlier this week, Aviva said its GI business in the UK, Ireland and Canada continues “trading positively” in the closing months of 2022. For the full year of 2022, expect a combined operating ratio of 94.6%.

Importantly, in this update it says that its dividend guidance and capital return outlook remain unchanged. This is good to know as a competitor Direct Line recently canceled its dividend due to weak business performance.

Dividend guide

As for the company’s dividend guidance, Aviva said in its third quarter results that it expects to pay 31p per share for 2022 and 32.5p per share for 2023. At the current share price, these payments translate to yields of around 6.8% and 7.1%. This is attractive.

However, there could be more returns for shareholders. In its Q3 results, the company also said it will start “additional return on capital” for the shareholders with the results of 2022 (in March).

This is all quite encouraging, in my opinion. In the near term, stocks can become cash cows.

Patchy’s dividend track record

One issue for me personally is the company’s long-term dividend track record. In the past, Aviva has been known to cut its dividend when profits fall. Over the last decade, has cut the payment on several occasions. As a former stockholder, I have had my fingers burned.

So, while the yield here looks attractive right now, I’ll hold off on buying the stock. I need to see a company demonstrate that it can consistently grow its dividend before I invest.

Until it shows a track record of stability in payout, I think there are better dividend stocks to buy for my portfolio.