I waited years for my Aviva (LSE: AV.) shares to come good, and now they’re falling again. At the time of writing on Thursday (26 March), the price had fallen 5% so far on the day. That means a 13% fall since the start of 2026, while the FTSE 100 has held pretty much flat overall.
So what’s happening, and what should investors think of doing now? Let’s take a closer look.
Ignore the hype
The headline writers love a good stock market crash. And while we haven’t actually had one yet, the FTSE 100 did fall into a technical correction when it dropped over 10% from its recent high. I like a good share price slump myself, but for a different reason. I still plan to buy more shares before I retire, so I want them to get cheaper… and shouldn’t we all want that?
We really do need to put the clickbait fear-mongering aside, and apply some long-term perspective to today’s short-term troubles.
Over five years, the Aviva share price has climbed 50%. That means £10,000 invested in Aviva shares just five years ago is already worth £15,000. That’s even after the falls of the past month or so. Oh, and it also doesn’t include dividends. Aviva offers a cracking dividend yield of 6.3% — though that’s a forecast, and not guaranteed.
Strong headwinds
What of the future? Aviva’s full-year results on 5 March were very impressive, I thought. CEO Amanda Blanc has driven a turnaround faster and more effectively than I expected when she came on board in 2020.
She told us, after Aviva’s “fifth consecutive year of strong, profitable growth,” that “we have achieved our 2026 financial targets one year early, highlighting the rapid and sustained progress we are making.”
The standout for me was the integration of Direct Line, which helped push operating profit up 25% over the year. Without the Direct Line contribution, we’d have seen a 15% rise — albeit still impressive.
In the year ahead and beyond, I expect more synergy and cost savings as Direct Line is integrated more tightly. And the diversification it brings boosts my confidence in Aviva’s safety margin — which I see as relatively wide for the industry it’s in.
Danger ahead
There’s always something looming that could hold back even the most positive outlook, isn’t there? In this case, rising geopolitical risk cannot have escaped anybody’s attention. And Aviva’s forecasts are based on what had looked like brightening global economic skies.
Even with earnings growth expected over the next few years, I thought the shares maybe looked close to being fully valued. And what about a forecast price-to-earnings (P/E) ratio of over 12 now? It might be a bit toppy in the face of economic clouds. So we could have further volatility ahead.
I won’t buy more Aviva shares, because I have enough and I rate diversification as especially important now. But for long-term investors with some room in their diversified portfolios? I think they could do well to consider Aviva on the dips.
