A Stocks and Shares ISA remains one of the most powerful tools UK investors have for building long‑term wealth. It not only provides an exemption from income and capital gains tax but also allows for withdrawals at any age.
Keeping every penny of returns sheltered from the taxman can make a dramatic difference to compounding over the years. And this FTSE 100 insurance and investment giant remains one of my standout investments for dependable income and steady growth.
So, how much can I make from it over time?
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
What are the dividend forecasts?
Aviva (LSE: AV) has a current dividend yield of 6.3%, based on its £6.28 share price and 39.3p 2025 payout.
Changes in either the price or the payout can push the yield down or up over time. However, analysts expect the firm’s dividend yields to rise to 6.6% this year, 7.1% next year, and 7.6% in 2028.
All of these are more than double the present FTSE 100 average of 3.1%.
What does this mean for yearly income?
Another £20,000 investment by me in the stock could make me £22,663 in dividends after 10 years.
The figure is based on the forecast 7.6% as an average and on the dividends being reinvested in the shares. This is known as dividend compounding, and it has a turbocharging effect on dividend income the longer it goes on.
After 30 years on the same basis — a standard investment cycle for long-term investors — the dividends would rise to £174,133. Including the initial £20,000 investment, the holding would be worth £194,133 by then.
And at that point, the shares would be generating £14,754 a year in income for me!
How does the growth engine look?
Underpinning sustained gains in dividends for any firm is consistent growth in profits over time.
A risk here for Aviva is a rise in the costs associated with settling claims, such as higher medical or property-repair expenses. Another is tighter regulatory capital pressure, where higher solvency requirements or shifts in capital rules. Both could impact margins, squeeze cash flow and slow dividend gains.
Nevertheless, analysts project Aviva’s earnings will grow at an average of 15.4% a year over the medium term at least. This looks extremely well supported to me by its 2025 results released on 5 March this year.
Operating profit soared 25% year on year to £2.2bn, while cash remittances edged up to £2.1bn. The figures reflected the robustness of Aviva’s diversified insurance, wealth and retirement business model.
Moreover, management expects over £7bn of cash remittances between 2026 and 2028, giving exceptionally strong visibility for future cash flows.
My investment view
The strong dividend outlook, rising earnings and exceptional cash‑flow visibility give me real confidence in the long‑term income potential here.
Moreover, the underlying business offers a rare blend of resilience, scale and capital discipline. All this matters enormously when compounding returns inside a Stocks and Shares ISA.
So, for investors seeking a dependable, steadily growing income stream sheltered from tax, this is exactly the kind of business I believe is worthy of serious consideration.
And I will certainly be buying more of the stock very shortly myself.
Should you invest £5,000 in Aviva Plc right now?
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Simon Watkins owns shares in Aviva.
