Buying the right dividend shares can be one of the most powerful wealth-building moves an investor ever makes.
Start with £1,000 in a FTSE 100 index fund today, and you’ll earn a passive income of roughly £31 a year at a 3.1% yield. That’s not exactly life-changing, but put that same £1,000 into the right individual stock and the income story can look very different indeed.
Take Aviva (LSE:AV.) as a prime example.
Why Aviva stands out
With a 6% dividend yield and six consecutive years of dividend growth, Aviva could be one of the most compelling income propositions on the London Stock Exchange right now.
That same £1,000 investment would generate around £60 a year in passive income – nearly double what a FTSE 100 tracker currently offers. And if Aviva continues hiking its payout as it has done for the past half-decade, that income stream will quietly grow larger without investors having to lift a finger.
Of course, just because payouts have increased in the past doesn’t mean they will continue to climb in the future. So is Aviva actually a good investment?
Looking at the latest first quarter results for 2026, the answer seems to be leaning towards yes. General Insurance premiums surged 19% to £3.4bn, while the group’s combined operating ratio improved a meaningful 2.5 percentage points to 94.1%. In Wealth, where Aviva’s the number-one player in the UK, net flows jumped 49% to £3.3bn, driven by a 71% surge in Workplace pension inflows.
The Direct Line acquisition, completed in July 2025, is also integrating ahead of schedule. Management expects to deliver capital synergies of more than £350m by year-end, which would push the Solvency II cover ratio comfortably above the 160%-180% target range.
In other words, the business seems to be firing on almost all cylinders. So what’s the catch?
Where the risks lie
No investment is without its complications, and Aviva’s no exception. Bulk purchase annuity (BPA) volumes fell 52% in the first quarter as competition intensified and quote activity softened. BPA’s a key growth engine for Aviva’s Retirement division, and it’s how the firm’s tapping into the enormous pension risk transfer market.
But with rival firms like Legal & General unlikely to stop chasing this market, Aviva could continue to see sustained weakness in this segment that might drag down earnings momentum.
At the same time, its Health arm, which sells private medical insurance policies, seems to be struggling as well. With lower demand from small- and medium-sized businesses due to lacklustre economic conditions, this part of Aviva’s growth engine appears to be misfiring.
To be fair, it’s far from disastrous, but it’s an important factor to watch closely moving forward.
The bottom line
Aviva’s a business doing most things right. It has a 6% yield, growing dividends, a strengthening general insurance franchise, and encouraging medium-term targets of 11% annualised operating earnings growth between now and 2028.
That’s why, for investors seeking dividend shares to buy, I think Aviva shares are worth investigating further. But it’s not the only income stock I’ve got my eye on right now…
What income stock do we like better than Aviva Plc right now?
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Zaven Boyrazian does not hold any positions in the companies mentioned.
