A few years ago, when the Aviva (LSE: AV.) share price was in a slump, change was clearly needed. The sprawling, unfocused, and confused giant needed better clarity and efficiency.
That’s been delivered in impressive fashion under the guidance of CEO Amanda Blanc. And judging by how 2025 went, and how 2026’s starting out, it looks like there might be a fair bit more to come.
“Outstanding performance in 2025“
With 2025 full-year results, the boss told us…
Operating profit was up a significant 25% and we increased cash and capital generation and IFRS return on equity. We have achieved our 2026 financial targets one year early, highlighting the rapid and sustained progress we are making. We are highly committed to growing our dividend and today we are announcing a final dividend of 26.2 pence per share, an increase of 10%, and we are commencing a £350 million buyback.
CEO Amanda Blanc, FY 2025
That’s a cracking outcome for shareholders who, like me, see Aviva as a source of long-term progressive dividend cash. She also highlighted a few things that I think could make the company an even more attractive proposition in the coming years. She spoke of…
- “Unrivalled scale with almost 22 million UK customers“.
- “Diversified model and market-leading technology“.
- “Clear strengths in artificial intelligence“.
- “Strong position to deliver … in the capital-light markets of wealth and insurance“.
Structural change
I like the way Aviva’s business mix is moving, hopefully reducing the cyclical risk that comes with this sector. As one of my colleagues recently wrote, noting Aviva’s strength in the wealth and workplace pensions businesses:
Unlike general insurance, where profits can fluctuate with pricing cycles and claims trends, wealth benefits from long-term structural tailwinds. Workplace pension contributions continue regardless of market sentiment, and demographic trends suggest increasing demand for retirement planning over time.
— Andrew Mackie, The Twelfth Magpie
Cyclical risk won’t however, go away. If the sector goes into a down spell, I fully expect Aviva to follow. That’s just the way share prices of companies in any kind of insurance business have historically reacted. Maybe though, Aviva might suffer bearish phases more lightly than others.
I’m also a bit wary of where the Aviva share price puts the company’s valuation. Forecasts suggest a price-to-earnings (P/E) ratio of 12 this year. That might seem reasonable. But at the moment, I reckon the economic risks mean financial stocks need a decent discount to help provide some safety margin.
So what’s the verdict?
I could easily see the Aviva share price easing off from its recent gains. And we might have a bit of a lacklustre spell while we wait for the economy to catch up. Still, I’d be happy with the expected 6% dividend yield to make up for any price weakness — and forecasts suggest it should rise in the next few years.
Aviva remains a long-term hold in my ISA. And I think investors might do well to consider joining me.
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Alan Oscroft owns shares in Aviva.
