For years, the Aviva (LSE: AV) share price couldn’t catch a break. Now it’s flying, up 23.76% in the last 12 months and 33.79% over five years.

That’s a pretty nifty return for an established FTSE 100 blue-chip operating in a mature and competitive sector. Especially as my figures only show share price growth. Throw in Aviva’s ultra-high dividend, and the 12-month total return is closer to 30%. Over five years, investors will be almost 70% to the good.

Today, Aviva shares come with a trailing yield of 6.81%. That’s forecast to hit 7.25% in 2024 and 7.4% in 2025.

Can it continue to beat its FTSE 100 competitors?

Here’s my first quibble. Dividend cover is thin, at around 1.2. I prefer it to be closer to two times earnings. That raises questions over whether shareholder payouts are sustainable. But analysts appear to think so, judging by those rising yield forecasts. 

The board felt confident enough able to hike the full-year 2023 dividend 7.7% to 33.4p per share. Aviva has now returned more than £9bn in capital and dividends to shareholders over just three years. And it recently launched a new £300m share buyback programme.

Making enough money to grow dividends doesn’t appear to be a problem. First-half profits to 30 June jumped 58% to £654m, with operating profits rose 14% to £875m.

And once again, the board seemed comfortable hiking the dividend, with the interim payout increased by 7% to 11p. 

Aviva is performing well across two key markets – general insurance and insurance, pension and retirement sales. It has a solid balance sheet, with a Solvency II cover ratio of 205%, although it slipped by 2 percentage points.

It also has a big opportunity in bulk annuity sales, where it “secured excellent volumes of £5.5bn at strong margins” in 2023. However, this is a competitive area, with Legal & General Group, M&G and Just Group just some of those eyeing the sector.

It’s beating rival blue-chips

Further interest rate cuts may be a mixed bag. It will make today’s whopping yield even more attractive, as savings rates and bond yields retreat, and boost investment sentiment generally. However, I’m worried that falling interest rates could hit an annuity sales, which have enjoyed a bump from today’s higher rates. That could eat into revenues and sentiment.

As a rule, I’m wary of buying stocks on the back of a strong run like the one Aviva has just enjoyed. I’m wondering how much gas it has left in its tank. A market downturn would hit the value of its investment portfolio, hitting the company’s balance sheet and investor sentiment.

With the stock trading at a modest 13.81 times earnings, only one thing is holding me back. I also have big holdings in FTSE 100 rivals Legal & General Group and M&G. They’ve been a bit rubbish, frankly, falling 0.39% and rising 3.46 respectively over the last year.

I back the wrong horses, at least so far, but as I said, investing is cyclical. I wish I’d bought Aviva, but I’ve made my choice and will stick with L&G and M&G.