Picture supply: Getty Pictures
What occurred to Aviva (LSE: AV.) shares at present (5 March)? I see one other nice set of outcomes, one other dividend rise, one other share buyback, and one other glad shareholder. The latter is me, and I hope there are lots extra of us. However the share worth fell 2.5% quickly after the market opened.
Does it imply buyers had been anticipating what we noticed, and have been disenchanted? Or is the valuation excessive sufficient on the present worth? Let’s have a look how the 2025 full yr went.
“Excellent”
Within the phrases of CEO Amanda Blanc, Aviva achieved “an impressive efficiency in 2025, our fifth consecutive yr of robust, worthwhile progress.” Working revenue is up 25% to £2.2bn. And working earnings per share (EPS) gained 17% to 56p — although bottom-line reported EPS got here in decrease at 26.9p.
The enterprise is clearly throwing off loads of money. There’s a brand new share buyback price as much as £350m, anticipated to occur between March and August.
And the board lifted its annual dividend by a powerful 10%, to 39.3p per share – properly forward of analyst forecasts. On the day gone by’s closing worth for Aviva shares, that’s a dividend yield of 5.9%. So we now have a dividend forward of the FTSE 100 common, and a progressive rise effectively forward of inflation.
And to show again to the enthusiastic CEO, she informed us: “We’ve achieved our 2026 monetary targets one yr early, highlighting the fast and sustained progress we’re making.” She added that Aviva is “extremely dedicated to rising our dividend.” And that appeals to long-term dividend buyers like me.
What’s it price?
The primary hazard most likely centres on the cyclical nature of the insurance coverage sector, and Aviva’s present valuation. On the reported EPS determine, we’re a trailing price-to-earnings ratio of 24. Even on the upper working EPS, we’re nonetheless a a number of near 12.
A number of years in the past, Aviva shares have been on a P/E of solely round six or seven. However proper now? I’m undecided I see sufficient security margin in that to deal with one other cyclical downturn.
It’s not at all certain we’ll have a downturn. And if we do, it may not occur within the coming decade. However over all of the years I’ve been following the sector, it’s proven probably the most ups and downs I can keep in mind out of any within the FTSE 100. However you realize, each downturn got here again up once more.
Stronger firm now
In 2025, Aviva maintained its primary place within the UK insurance coverage market and quantity three in Eire, with over 12m clients. And within the UK and Eire collectively, gross written premiums rose by 27% — by a mix of quantity and profitability.
Amanda Blanc actually has labored wonders for Aviva. It’s way more centered and environment friendly than it was when she took over in 2020.
Even when Aviva may not be on a screaming low cost valuation now, I just like the underlying firm. We’d see a weak spell for the shares, however I’m holding. I feel long-term buyers ought to contemplate shopping for, particularly on any dips.
