Even after the Aviva (LSE:AV.) share price jumped over 36% this year, shares of this insurance giant continue to offer a market-beating 5.7% dividend yield.
That’s made it a popular stock among British retail investors. But what are the experts saying about this business? And can Aviva continue to climb even higher in 2026?
Latest share price projections
Of the 11 experts tracking this business, the team at RBC Capital currently stand out as the most bullish with a 760p share price target, followed by UBS at 750p.
Compared to where the stock’s trading today, that suggests shareholders could earn up to 17.9% by this time next year. And that’s before counting the extra returns from dividends. But as every experienced investor knows, projections have to be taken with a healthy dose of scepticism. So how realistic are these expectations?
A common theme among both analyst teams is Aviva’s success in hitting its 2026 financial targets a year ahead of schedule. And following this triumph, management sets out new three-year targets, which include:
- Achieving an average of 11% annualised growth in operating earnings per share
- Maintaining a return on equity above 20% by 2028
- Delivering at least £7bn in cash remittances between 2026 and 2028 that can be used to fund dividends, buybacks, internal investments, or paying down debts
At the same time, a total of £225m in savings is expected to emerge through synergies with its recent acquisition of Direct Line by 2028. And combined, these all point toward a leaner enterprise prudently executing its transition towards a capital-light business model.
With that in mind, it’s easy to understand why the experts project more double-digit growth next year. However, even with this optimistic outlook, there remain some key risks to keep an eye on.
What to watch
The business is still in the process of digesting its Direct Line acquisition. And it’s still too early to tell whether this deal will live up to expectations and deliver value to shareholders. But even if everything goes smoothly here, there remains the persistent uncertainty surrounding inflation.
Insurance contracts often have different durations, but most personal and commercial ones are often written with a 12-month duration. But with inflation proving stubborn at nearly twice the Bank of England’s target, the cost of insurance claims is on the rise. In other words, Aviva’s insurance margins are under pressure. And this could be amplified if there are any unexpected changes to insurance regulation.
The uncertainty surrounding the UK’s economic climate also poses a threat to Aviva’s investment portfolio. Weak investor sentiment and sudden shifts in gilt yields could have an adverse impact. And while this may only be a short-term issue, it might be sufficient to slow Aviva’s momentum.
The bottom line
While Aviva is operationally impressive, its exposure to wider macroeconomic headwinds gives me pause, even with the bullish forecasts from the experts. So personally, this isn’t a stock I’m rushing to buy right now.
However, for investors comfortable with the macro risk and looking to diversify into the insurance industry, Aviva could still be worth a closer look. After all, it does seem to be in a much stronger position versus most of its peers.
