Aviva PLC (AV) announced that it is slashing its dividend in an attempt to accelerate its turnaround, sending shares tumbling in Thursday morning trading.
The British insurer announced that it will cut its dividend from 2012 earnings to 19 pence, down from 26 pence the previous year. Analysts were forecasting a dividend roughly in line with last year, so the announcement came as a major surprise. ”This was a difficult decision, but it was absolutely necessary to give certainty to our shareholders, to reduce debt, and to put Aviva on a sound footing for the future,” Aviva Chief Executive Mark Wilson told reporters.
This represents the second time in four years that Aviva has implemented a major dividend cut.
Aviva shares were hammered in early morning trading, falling more than 10% during the morning session. The stock had already lost more than 12% year-to-date, putting it now down more than 20% on the year.
The Bottom Line
Shares of AV dipped below $10 on Thursday morning, recently trading at $9.67. The ADR closed at $10.91 on Wednesday.
AV is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.2 out of 5 stars.