This boring business is one of my best stocks to buy now!

Compass pointing towards 'best price'

Not all my best stocks to buy now are businesses that excite me or get me off the edge of my seat. Insurance giant Aviva (LSE:AV) is a perfect example. I do think it could make a good addition to my portfolio, however.

Boring but cheap

Insurance is a consumer staple and some of my best stocks to buy now are from this sector. Aviva is a profitable business that is currently cheap to buy in my opinion. At current levels it trades on a price-to-earnings ratio of close to 8. In addition it has a dividend yield of over 6%. This is 3% higher than the broader FTSE 100 benchmark of 3%, which I think is impressive. As I write, shares are trading for 417p per share. This time last year shares were trading for 287p per share which means its share price has increased by 45%.

Performance and strategy

Most of my best stocks to buy now perform consistently and Aviva is no different. Last week it announced interim results for 2021. Twelve months ago Aviva released a new strategy to streamline the business and return capital to shareholders. This report showed it was making excellent progress.

In the report, Aviva confirmed that operating profit had increased by 17% compared to the same period last year. It also confirmed general insurance business and new business increased by 6% and 13% respectively.

Aviva committed to return £4bn to investors by the end of 2022. It’s going to start that process by buying back £750m worth of shares which it announced in the same report. In addition, it also confirmed a dividend. My best stocks to buy now make me a passive income too so Aviva fits right in.

Aviva’s strategy promised to focus on its core business and it has sold off approximately £7.5bn worth of other businesses to do this. I believe a focus on core business will mean better profitability. The cash raised will be returned some to investors as well as paying down debt, which is always good to see. Furthermore, Aviva has made plans to open further operations in its core territories such as Canada and Ireland. This growth plan is pleasing to see.

Best stocks to buy now have risks

Firstly, cost reduction and streamlining operations is easier said than done. If Aviva’s strategy does not succeed or falters, this could affect its bottom line and profits. Next, Aviva’s business could be affected by the economy as a whole. Any slowdown in the economy, which is still on an uneasy footing due to the pandemic and Brexit, could affect Aviva’s profitability.

Overall I do like Aviva as one of my best stocks to buy now. It is performing well and has a track record of performance. It is operating with investors in mind by returning capital and showing a clear strategy for growth and further profitability. I would happily add shares to my portfolio at current levels.

The post This boring business is one of my best stocks to buy now! appeared first on The Motley Fool UK.

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Jabran Khan 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.

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