Anyone investing £5,000 in Aviva (LSE:AV.) shares five years ago would have bought themselves 1,231 of them. Today (15 April), those same shares are worth £7,742, a return of 55%. For comparison, a £5,000 investment now would buy 436 fewer.
However, this ignores dividends. For its last five financial years, the insurance and savings group’s declared payouts of 161.45p a share. Add this to the capital growth and the overall return is nearly 95%. But what might the next five years bring? Let’s have a look.
Confidence in the future
If the company’s boss is to be believed, the outlook is a good one. Since 2021, she claims the business has been “transformed” and “whilst we have made significant progress, there is much more to come.”
Much of this confidence stems from Aviva’s status as the UK’s market leader in general and life insurance products (it has a 26% share of the latter). It’s also the country’s leading provider of individual annuities, number one for workplace pensions, and it has Britain’s largest equity release loan book.
In Ireland, it’s the top provider of income protection insurance and the third biggest general insurer. It also ranks second for day-to-day insurance products in Canada. In addition, its UK and Ireland wealth management division manages £262bn of assets on behalf of its clients.
This gives the group the scale to generate a healthy profit that, in turn, supports a generous dividend.
A strong track record
In 2025, the group reported a 25% year-on-year increase in operating profit. For 2026–2028, it’s targeting an 11% annual increase in operating earnings per share. Last year, the group delivered a 17.5% return on equity. Also, as a sign of confidence in its capacity to generate surplus cash, it’s launched a £350m share buyback programme.
Since 2021, it’s raised its payout by 78% — the increase was 10% in 2025. The stock’s now yielding 6.2%, the seventh-highest on the FTSE 100 and more than twice that of the index as a whole. Of course, there are no guarantees when it comes to dividends.
Over the past five years, Aviva’s delivered an unusual combination of both impressive share price and dividend growth.
Possible threats
But despite its recent success, it still faces some potential challenges.
The scale of its investment portfolio makes it vulnerable to market uncertainty. Rising inflation could affect its £190bn of bonds and ongoing geopolitical turmoil is likely to further reduce the value of the £113bn of shares that it owns.
Also, there are fears that AI tools could make it easier for customers to shop around looking for cheaper insurance.
My view
However, its 2025 results suggest that the business is in good shape. Its balance sheet remains strong and it comfortably meets the regulatory minimum for reserves.
Looking ahead, with the State Pension age likely to rise further, this could lead to an increase in the number of individuals wanting to take control of their retirement planning.
I also like the group’s capital-light business model. By focusing on fee-based products, it hopes to deliver a return on capital of more than 20% by 2028.
On balance, I think Aviva’s an excellent all-round stock to consider.
