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For me, Aviva (LSE: AV) shares are those that acquired away. After I was searching for a FTSE 100 insurer so as to add to my SIPP three years in the past, I shunned them in favour of rival blue-chip Authorized & Basic.
On the time, Authorized & Basic provided the upper yield, round 10% in comparison with 6%, however its shares had underperformed. I made a decision that, in addition to the dazzling dividend revenue, Authorized & Basic provided extra restoration potential. Was I proper?
It’s given me baggage of revenue, however development has upset. Authorized & Basic shares are up 20% over three years, whereas Aviva climbed round 70%.
My time may nonetheless come. Authorized & Basic is up 21% during the last 12 months, whereas Aviva is roughly flat. So I’m sticking with what I’ve acquired. I additionally get the next trailing dividend of seven.55%, in comparison with Aviva’s 5.76%.
However I’m additionally intrigued about the place Aviva goes subsequent.
FTSE 100 turnaround play
Amanda Blanc has performed a terrific job of overhauling Aviva’s enterprise, promoting non-core abroad operations, strengthening the steadiness sheet, simplifying the group and sharpening its deal with the UK, Eire and Canada.
Full-year working revenue jumped 25% to £2.2bn in 2025. Within the first half of 2026, it rose one other 24% to £1.3bn. Aviva is concentrating on 11% annual development in working earnings per share between 2025 and 2028.
But the shares have stalled. They’re flat during the last yr and commerce at round 680p right now. Consensus one-year dealer goal is 737p, simply 8.4% increased.
There are far more optimistic forecasts. Berenberg raised its goal from 800p to 820p in August and charges Aviva a Purchase. It anticipates sturdy earnings, wholesome money era and continued dividend development, as Aviva builds on its more and more dominant place in UK normal insurance coverage.
JPMorgan Cazenove just lately set an 800p goal and RBC Capital Markets was shut behind with 780p. JPMorgan argues Aviva has a comparatively engaging valuation in comparison with its friends, with sturdy capital era and dividend cowl.
Can this inventory hit new heights?
Citigroup is far much less satisfied. It has a 721p goal and suggests the shares are already near honest worth.
There are causes to be extra optimistic. Aviva’s Direct Line aquisition may verify its normal insurance coverage dominance, whereas its wealth enterprise is rising strongly. It has 25m prospects, priceless proprietary information and is beginning to deploy AI throughout underwriting, claims and customer support.
Aviva appears a bit costly with a price-to-earnings ratio of 25.2. However the ahead P/E is a much more tempting 13x, reflecting expectations that earnings will preserve rising.
There are dangers. The UK financial system may weaken, insurance coverage stays fiercely aggressive and Direct Line synergies could not come via. A inventory market crash or AI-driven correction may drag down the broader FTSE 100.
Nice for revenue and development
Within the quick time period, Aviva shares can go anyplace. Over the longer run, I nonetheless assume that is a pretty revenue inventory value contemplating. The shares may simply hit 800p, however a lot is dependent upon the broader temper.
Anyone nervous about falling markets would possibly maintain off and search for a chance to choose up Aviva at a cheaper price than right now. In any other case, there are some actually tempting UK revenue shares on the market proper now…
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Harvey Jones owns shares in Authorized & Basic.
