Investors looking to Aviva (AV.) for income will be pleased with its 2016 performance. A sharp uptick in cash remitted to the composite insurer from its businesses encouraged management to increase the dividend payout ratio by four percentage points to 46 per cent of operating earnings per share - closer to its 2017 target of 50 per cent. In even better news, chief executive Mark Wilson revealed the company's intention to return even more capital in the near future, with a share buyback currently the preferred method.
In what Mr Wilson describes as "a high quality problem", the group has excess capital as a result of operating profit growth across its three major divisions: life business; general insurance and health; and fund management. The UK and Ireland life business remitted almost £1.1bn in cash, up almost two-thirds. This included £250m of the £1bn planned from the Friends Life integration, which completed by the year-end. New business was up primarily thanks to a 19 per cent increase in individual annuity sales.