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What occurred to Aviva (LSE: AV.) shares right this moment (5 March)? I see one other nice set of outcomes, one other dividend rise, one other share buyback, and one other blissful shareholder. The latter is me, and I hope there are a lot 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 had been disillusioned? Or is the valuation excessive sufficient on the present worth? Let’s take 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 a lot of money. There’s a new share buyback value 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 yesterday’s closing worth for Aviva shares, that’s a dividend yield of 5.9%. So we’ve got 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 advised us: “Now we have achieved our 2026 monetary targets one yr early, highlighting the speedy 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 value?
The principle 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 couple of years in the past, Aviva shares had been on a P/E of solely round six or seven. However proper now? I’m unsure I see sufficient security margin in that to deal with one other cyclical downturn.
It’s on no account positive we’ll have a downturn. And if we do, it won’t 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 bear in mind out of any within the FTSE 100. However you already know, 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 way of a mixture of quantity and profitability.
Amanda Blanc actually has labored wonders for Aviva. It’s far more targeted and environment friendly than it was when she took over in 2020.
Even when Aviva won’t be on a screaming low-cost valuation now, I just like the underlying firm. We would see a weak spell for the shares, however I’m holding. I believe long-term buyers ought to take into account shopping for, particularly on any dips.
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