How much would an investor need in Aviva shares for a £147 monthly passive income?

Ben McPoland shows how an ISA portfolio could eventually throw off a decent amount of income each year, with help from Aviva shares.

| More on:
Road trip. Father and son travelling together by car

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Aviva (LSE:AV.) shares have been a breath of fresh air in my portfolio since I bought them in late 2023 at 413p apiece. Not only have they appreciated in value to 644p, they’ve also pumped out lovely growing dividends.

But I was wondering recently how many Aviva shares it would take to pay for the average monthly energy bill. According to EDF Energy, this is currently £147 for a medium-sized household.

Let’s take a closer look at this FTSE 100 insurance stock to find out.

Strong performance

After more than a decade in the wilderness following the financial crisis, Aviva stock has burst back into life in recent years. Under CEO Amanda Blanc, the insurer has exited nearly all international markets to focus on more profitable businesses in the UK, Ireland, and Canada.

Importantly, Aviva has pivoted towards wealth management and general insurance in the UK — products that require less cash sitting on the balance sheet than life insurance. This asset-light strategy has been paying dividends, quite literally. 

We are accelerating our growth in capital-light areas, in line with our strategy, and now expect our business to be over 75% capital-light by the end of 2028. This is good news for shareholders, as we deliver stronger growth and better returns, using less capital. The outlook for Aviva has never been better.
CEO Amanda Blanc, Q3 2025

In Q3, general insurance premiums rose 12% to £10bn, while its wealth business secured net flows of £8.3bn, bringing assets to £224bn. In the UK, there was a 24% jump in personal lines (motor, home, travel insurance, etc), which largely reflected Aviva’s £3.7bn acquisition of Direct Line.

Encouragingly, Direct Line’s £100m cost-cutting plan was finished three months early, and Aviva is now targeting £225m of additional synergies by 2028. The combined businesses forms the UK’s largest motor and home insurer.

Passive income plan

Turning to income, the latest 12-month forecast puts Aviva’s forward-looking dividend yield at a very respectable 6.4%. This represents a FY25 final dividend in May and a FY26 interim dividend expected around October.

So, to earn £147 per month — the equivalent of £1,764 per year — to pay for an energy bill, an investor would need to spread these two payments out across the year. The shares would cost around £27,000 at today’s market price.

Naturally, that’s an unaffordable sum for most people. However, it’s possible to build towards it by investing, say, £600 per month in Aviva shares.

In this scenario, it would take just under three and a half years to accumulate enough shares to pay £1,764 in annual dividends. This assumes payouts are reinvested during this period rather than spent.

Unfortunately, UK energy bills will probably be higher in three years’ time, but hopefully Aviva’s dividend will rise to offset that.

For simplicity’s sake, I’ve also assumed a stable share price across this period, which is unlikely (ideally, it will rise).

Diversification

No stock is risk-free, of course, and Aviva could underperform if the UK economy hits the rocks over the next couple of years. This might see consumers cancel certain insurance policies.

Also, it would be best to not put all eggs in one Aviva-shaped basket. But as part of a diversified high-yield ISA portfolio, I think this FTSE 100 stock is well worth considering today.

Ben McPoland has positions in Aviva Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

This way, That way, The other way - pointing in different directions
Growth Shares

This FTSE stock is primed to rally 65% according to the experts

Jon Smith raises an eyebrow after looking at multiple analyst forecasts for a FTSE share over the coming year and…

Read more »

Close-up of a woman holding modern polymer ten, twenty and fifty pound notes.
Investing Articles

Looking for UK stocks to buy for income? This one caught my eye!

On the hunt for stocks to buy, Christopher Ruane weighs some pros and cons of an investment trust with a…

Read more »

Investing Articles

Here’s how much £10,000 invested in Rolls-Royce shares could soon be worth

Rolls Royce shares are on P/E ratios above 30 for the next couple of years, and that could be good…

Read more »

Rear view image depicting a senior man in his 70s sitting on a bench leading down to the iconic Seven Sisters cliffs on the coastline of East Sussex, UK. The man is wearing casual clothing - blue denim jeans, a red checked shirt, navy blue gilet. The man is having a rest from hiking and his hiking pole is leaning up against the bench.
Investing Articles

£20,000 of savings? Here’s how that could ultimately generate a £672 monthly second income

How do some people manage to earn a second income without taking on another job? Christopher Ruane explores one potential…

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

I’m targeting £1,768 a year in dividends from £12k in this high-yield UK income stock

Harvey Jones crunches the numbers to show how reinvesting dividends from this high-income UK stock could build a generous passive…

Read more »

Golden hand holding Number 2 foil balloon.
Investing Articles

2 UK stocks tipped to grow 50%+ over the next 12 months

Could these two UK stocks really grow by more than 50% over the next year? James Beard considers whether this…

Read more »

Night Takeoff Of The American Space Shuttle
Growth Shares

This FTSE 250 share is my early pick to get promoted to the FTSE 100 next month!

Jon Smith points out a FTSE 250 share that has been outperforming the index recently and could get a tap…

Read more »

Investing Articles

Up 233% but with a P/E of 17! So can the Barclays share price keep going?

Harvey Jones is hugely impressed by the stunning Barclays share price performance, but he's wondering how long it can conquer…

Read more »