Aviva plc isn't the only bargain dividend stock I'd buy today

I'm happy to tell you up front that Aviva(LSE: AV) is one of my favourite FTSE 100 dividend stocks, and that I bought some shares when they were looking a bit battered from the financial crisis fallout.

Aviva's full-year results had my colleague Rupert Hargreaves asking whether Aviva could be the Footsie buy of the decade, and I share his enthusiasm. Since the resumption of progressive dividends, Aviva has been rapidly ramping up its annual cash payments, while still keeping them adequately covered by growing earnings.

And 2017 was no exception, with the insurance giant upping its dividend by a cracking 18% to 27.4p, for the fourth consecutive year of double-digit growth. The dividend, which yields 5.3% on the current share price, looks to be well supported by earnings, and by cash and liquidity.

Cash

Aviva saw cash remittances rising 33% to £2,398m, with general insurance net written premiums up 11% to £9,141m, and its Solvency II capital surplus improved to £12.2bn. I'm confident that I'm going to carry on receiving my annual dividends.

The firm's strong cash generation also means it's paying down debt, is in a strong position to make acquisitions when appropriate, and I think the more focused company presents considerably less risk than it did in the bad days of over-stretching.

Crucially, I don't think the reduced risk is yet fully factored into the share price, even bearing in mind that insurance is fundamentally a business built on risk. A forward P/E of only a little over nine, with forecast dividend yields heading above 6%, looks too cheap to me. I think I'll be using this year's dividend to buy more shares.

Recovery

I'm alway wary when I see a good dividend payer issue a warning which results in a share price fall, fearing that a cash shortfall and a dividend cut could be just around the corner.

Although a trading update from Emis Group(LSE: EMIS) in January looked solid and it reported a strong balance sheet, a worrying release the same day caused a share price crunch. The company, which specialises in healthcare software and services for GPs, hospitals and pharmacies, told us that its new chief executive had initiated a review of its customer and product support processes. And that it had uncovered "a failure to meet certain service levels and reporting obligations with NHS Digital, relating to the Group's EMIS Web product for GPs in England."

Fundamental failures of that nature can have a long-lasting impact, and a recovery to best practice can take some time. But an examination of Emis's full-year results on Wednesday is convincing me that this has been a one-off problem and that there's no real threat to the firm's dividend.

One-off

Reported operating profit fell 55% to £10.6m, in line with expectations, but adjusted operating profit came in only 3% down at £37.4m. With operating cash generation up 17% to £44.4m, the dividend was lifted by an inflation-busting 10% to yield 3.2%.

Chief executive Andy Thorburn described the service failure as "a serious, but isolated incident." He went on to assert that Emis continues "to lead the way in joined-up healthcare IT, with market-leading positions, high levels of recurring revenue and a strong financial position."

House broker Numis Securities reckons the Emis share price has fallen too far -- which we might expect them to. But I agree.

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Alan Oscroft owns shares in Aviva. The Motley Fool UK has recommended Emis Group. 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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