Despite a weak Footsie, Aviva (LSE: AV.) shares gained a few percent points when the stock market opened on 16 August.

It’s all about H1 results, which showed the insurance firm ahead of its targets. The Aviva share price is still down close to 40% over five years, mind.

So could it be the best buy on the FTSE 100 right now? I think there’s a good argument for it.

Dividend boost

Operating profit in the half of the year came in at £715m. That’s an 8% boost on the same period last year. And it’s ahead of City forecasts.

It looks like sales and profits are up across the firm’s divisions, and across its geographic businesses too.

Chief executive Amanda Blanc said: “Aviva’s cash and capital position is robust and, in line with our guidance, we have increased the interim dividend by 8% to 11.1p, and estimate full year 2023 operating profit growth of 5% to 7%.“

That’s the key measure for me, a growing dividend.

That 11.1p per share is 8% above the interim last time round. And, something pretty rare these days, it’s a rise that’s ahead of inflation.

Progressive

In other news the same day, we heard that UK inflation has dropped for the second month in a row. It stood at a year-on-year 6.8% in July.

Never mind short-term ups and downs, I want a long-term progressive dividend that beats inflation measured on the decades scale.

After a few tough years of refocus for Aviva, it’s a bit early to say if that’s what we’ll see now. But a similar 8% hike in the final payout would give us a full-year dividend yield of 8.6%, based on the share price at the time of writing.

We’re not back to dividend levels we saw before the pandemic. But this is a slimmed-down and more efficient company, so we’re looking at rebased dividends.

Still uncertain

I reckon we’ll still see uncertainty for some time to come. It’s hard to predict from one year to the next in the current financial climate. And that seems unlikely to ease until we get back to stable inflation and lower interest rates.

I expect weak sentiment to continue too, and I think Aviva shares could still have a rocky second half.

I mean, this is a cash-generative stock with a high dividend yield, on a forecast price-to-earnings (P/E) ratio of under 10 and dropping.

If investors aren’t rushing out to buy, there’s clearly still plenty of fear and doubt about.

Cash flows

Net cash flows in Aviva’s investing operations remained positive in the half, at £0.2bn. That’s good, but it’s another area of risk. If it should dip, or turn to outflow, in the second half then I could see more share price pressure.

Do I sound too cautious here? If I am, it’s because I first bought Aviva shares some time ago, and I’ve seen a few false starts.

But Aviva is a top-up candidate for me now.

The post Here’s why I think Aviva shares could be the FTSE 100’s best buy appeared first on The Motley Fool UK.

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More reading

• What’s wrong with the Aviva share price?
• Passive income stock: 4 reasons why I’d buy Aviva shares today!
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• Here’s how many Aviva shares I’d need to buy for a £100 monthly income!
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Alan Oscroft has positions in Aviva Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.