It’s been a topsy-turvy month for Aviva (LSE:AV.) shares. Though it doesn’t trade in the Middle East, the region’s conflict poses risks for companies across the globe, this one included.
Over a one-month horizon, the FTSE 100 stock has fallen 1.8% in value. It means a £5,000 investment made on 13 March would be worth £4,910 today, a drop of £90.
You may be wondering where Aviva’s share price will be heading next. Given the fluid situation in the Middle East, it’s almost impossible to predict. But investors still have a strong appetite for the financial services giant — it’s the 15th-most purchased stock among AJ Bell clients in the last week.
Good and bad
As I mentioned, Aviva doesn’t have operations in the conflict zone. Its footprint comprises the UK, Ireland and Canada. Yet the war has far-reaching consequences for inflation and interest rates, and ultimately for consumer spending and economic growth.
The question is, how badly might Aviva be affected? Fortunately it has a sprawling general insurance division to help offset these risks.This accounted for 56% of group operating profit in 2025, and has risen further following the firm’s acquisition of Direct Line in July. General insurance exposure helps protect revenues, as demand for home and car insurance remains stable regardless of economic conditions.
But as Aviva’s share price drop indicates, it’s still vulnerable in the current climate. Why? Consumer outlay in other areas like life insurance, pensions and investment accounts could sink if people start feeling the pinch. There’s also the danger that financial markets plunge, hitting the fees the firm generates from assets under management (AUMs).
Growth opportunities
Still, Aviva remains a top share to consider in my view. Its long-term outlook remains intact as rapidly ageing populations in its markets drive demand for retirement and wealth products.
Aviva is capitalising on this trend by growing its UK wealth platform, targeting workplace pensions and expanding its retirement product range. It’s also investing heavily in digital to boost customer retention and cross-selling opportunities.
One final thing: Aviva’s strong financial foundations give it scope to boost earnings through further acquisitions. Its Solvency II capital ratio was a healthy 180% as of December.
A FTSE 100 bargain
Following recent volatility, Aviva has a forward 6.7% dividend yield at today’s share price. That’s one of the highest on the FTSE 100, and based on payout estimates I believe are more than achievable. This reflects the firm’s high proportion of capital-light businesses and strong balance sheet.
The dividend yield rises to 7.2% for 2027. And Aviva shares also offer great value based on expected earnings. The price-to-earnings growth is 0.1 for this year, and remains below the value yardstick of 1 all the way to 2028.
While not without risk, I think Aviva’s one of the most attractive dip buys to consider right now.
