The Aviva (LSE: AV.) share value has elevated by 60% over the previous 5 years. Okay, it’s no Rolls-Royce — but it surely’s significantly higher than rivals Authorized & Common and Customary Life.
And that’s simply the worth progress — when adjusting for dividends, the overall return is nearer to 187%. It means shareholders that reinvested all dividends would have netted an annualised return of 23.7% a yr since April 2021.
Do you have to purchase Aviva Plc shares as we speak?
Earlier than you determine, please take a second to assessment this report first. Regardless of ongoing uncertainties from Trump’s tariffs to international conflicts, Mark Rogers and his crew consider many UK shares nonetheless commerce at substantial reductions, providing savvy traders loads of potential alternatives to study.
That is why this could possibly be a really perfect time to safe this beneficial analysis – Mark’s analysts have scoured the markets to disclose 5 of his favorite long-term ‘Buys’. Please, do not make any massive choices earlier than seeing them.
Created on TradingView.com
That’s nearly triple Customary Life’s 66.3% complete return in the identical interval. So does that imply traders missed the boat? Not essentially. Taking a look at worth metrics, Aviva doesn’t look horribly overvalued. Right here’s why…
Earnings visibility
The worth of an organization can’t be straight interpreted utilizing the share value alone. Many penny shares are exceptionally beneficial, whereas some high-price tech shares aren’t value half their listed worth.
Precisely assessing a inventory’s worth isn’t any simple job and depends on the accuracy of earnings projections. When a enterprise has a strong pipeline of orders or multi-year lengthy contracts, that is simpler to do.
In the case of insurers, it’s necessary to evaluate just a few key components, together with:
- Solvency protection.
- Premiums.
- Earnings progress.
- Money movement.
- Steadiness sheet well being.
In Aviva’s case, its Solvency II cowl ratio dropped to 180% after the current Direct Line acquisition. Nevertheless, a reported £350m in financial savings is predicted to assist it enhance over time.
Extra importantly, the enterprise is concentrating on annualised earnings progress of 11% over the approaching three years. Contemplating earnings rose 25% in 2025, this looks like a practical goal.
Revenue enchantment
Good worth apart, for earnings seekers, Aviva’s dividend story is arguably the primary attraction. The entire dividend per share for 2025 was 39.3p, up 10% on the prior yr, and the corporate’s guided to ongoing progress.
The yield’s remained regular at roughly 6.2% for the previous yr, greater than most FTSE 100 names (however admittedly lagging key rivals). Protection is skinny however the 41-year-long monitor file helps quell any fears of a pause.
Plus, the lately rebooted £350m share buyback programme provides excessive conviction, supported by robust earnings and money technology.
Nonetheless, the chance of rising claims inflation is a key concern. Greater prices for repairs, medical therapy or weather-related payouts can squeeze underwriting margins, particularly usually insurance coverage.
A few quarter of Aviva’s earnings come from motor claims alone. In the event that they outpace premium will increase, earnings take successful, which has been a major problem for insurers recently.
The underside line
The earnings story stays the core promoting level for Aviva, though current progress has turned heads. However dividends imply little if the share value drops sooner than they pay out. That’s why it’s necessary to keep away from overpriced shares or you could possibly danger getting caught in a worth entice.
Macro challenges imply Aviva most likely gained’t obtain the identical returns within the subsequent 5 years, however the valuation doesn’t level to vital danger of a downturn both.
So for traders on the lookout for a strong dividend compounder in a long-term ISA, it stays a great choice to contemplate. That stated, current geopolitical developments level to stronger progress alternatives elsewhere on the FTSE…
