With that in mind, it isn’t surprising Aviva’s among some of the most popular FTSE 100 stocks to buy right now, according to AJ Bell‘s latest trading data.

But is this all about to come crashing down?

What are the experts worried about?

The upward trajectory of Aviva shares has been largely driven by a genuine and sustained operational transformation at the hands of CEO Amanda Blanc. Having successfully capitalised on the tailwinds created by elevated interest rates, particularly in the annuities market, Aviva’s earnings and margins have all materially improved, triggering a re-rating for Aviva shares in the eyes of institutional analysts and investors.

But this is where things might be starting to get sticky. Following its share price rally, Aviva now trades at a forward price-to-earnings ratio of 12.99 – above its 10-year average of 9.09 by 43%.

Seeing a higher earnings multiple for a business that’s delivered a step change in its financial performance isn’t unusual.

But with the tailwinds of higher interest rates starting to slow, the company’s ability to maintain its current pace seems to lie squarely with the successful integration of Direct Line. And integrating a massive £3.7bn acquisition comes with substantial execution risk.

Aviva’s challenging task

The track record of businesses pulling off large-scale acquisitions is fairly bleak, with most failing to generate any value for shareholders once all the unexpected costs emerge.

To Aviva’s credit, its takeover of Direct Line has so far seemingly been relatively pain-free. Impressive synergies are already emerging, and early regulatory feedback appears to be relatively supportive. Yet the process is far from complete.

Prior to its acquisition, Direct Line built its reputation as a direct-to-consumer, no-broker insurer. A perceived shift away from this approach to doing business could alienate existing loyal customers.

At the same time, management has to shift all of Direct Line’s old claims, underwriting, and policy IT systems onto Aviva’s own infrastructure – a multi-year task that’s notorious for delays and cost overruns.

In other words, while the integration of Direct Line has so far proven relatively smooth, there’s still a risk that might change. And with it, investors may reassess their willingness to attach a premium to Aviva shares.

So is now the time to sell?

It’s important not to ignore the significant integration risk this business currently faces. But at the same time, it’s worth pointing out, under Blanc’s leadership, Aviva has been developing a habit of defying analyst expectations. And with a juicy dividend yield on offer, investors are being compensated for taking on a bit of risk.

It’s important not to ignore the significant integration risk this business currently faces. But at the same time, it’s worth pointing out that, under Blanc’s leadership, Aviva has been developing a habit of defying analyst expectations. And with a juicy dividend yield on offer, investors are being compensated for taking on a bit of risk.

With that in mind, for investors looking to gain exposure to UK insurance, drip feeding some capital into Aviva shares over time, could be a move worth considering.

The post What’s wrong with Aviva and its share price? appeared first on The Motley Fool UK.

The answer could be more than you think!

Taking a long-term approach to wealth creation

The key is time. A fiver a day may not sound like much, but if could add up to a lot – depending on how many days are involved!

Over a year, for example, £5 a day would add up to £1,825. Over a decade, it would come to over £18,000.

But simply saving the money might not be enough to generate passive income unless, for example, it earned interest. One way to try and earn passive income would be to put it into shares that pay dividends.

Never look a gift horse in the mouth

Not all shares pay dividends, even if they have done so in the past.

Basically a dividend is money a company pays out to shareholders because it generates more cash than it needs to run its business. Why do they do that? One reason can be to make owning the shares more attractive for potential investors.

From a passive income perspective, this could be a lucrative opportunity to investigate.

Using dividends to earn more dividends

Going back to the example above, what if that £5 a day was drip fed into shares with an average dividend yield of 6% (meaning that every £100 spent on them ought to generate £6 a year of annual income)?

Doing that, reinvesting dividends along the way ought to create a portfolio worth over £24k after a decade. At a 6% dividend yield, that should generate around £1,443 of passive income yearly – nearly £28 a week.

What I look for when buying dividend shares

Is a 6% yield possible? It is almost double the current FTSE 100 yield of 3.1%, but I do see it as feasible even while sticking to high-quality shares.

Remember I said above that dividends are what a company may pay when it has spare cash. So when hunting for income shares to buy, I look for proven business models I believe have long-term cash generation potential.

One share to consider in today’s market

With a 6.1% yield, Aviva (LSE: AV) is the sort of company I have in mind – and one I think is worth consideration for its passive income potential.

Aviva demonstrates that no dividend is ever guaranteed, having cut its own sharply in 2020. Since then though, the payout has been climbing steadily.

As the country’s leading general insurer, Aviva benefits from economies of scale. That large customer base means it can also try to sell more products to existing customers, something it is already successfully doing with millions of them.

Being so large in one market brings the risk that competitors may try to steal Aviva’s lunch. That could hurt profit margins.

But over the long run, I see this as a proven business in a resilient industry that benefits from economies of scale and a cash generative business model.

The post What sort of passive income stream could you build for a fiver a day? appeared first on The Motley Fool UK.

It’s not tough to see why investors have been more reluctant in 2026, with stock market volatility picking up following the start of the Iran conflict. The FTSE 100 has been up and down like a yo-yo, and stacks of smaller-cap shares have been hit even harder.

No-one likes seeing the value of their investments plummet. But have ISA investors been too cautious in recent weeks?

Volatile markets

It depends. Stock investing isn’t necessarily for those with low risk tolerance. And the dangers to share prices and dividends have grown significantly in recent weeks.

With energy prices spiking, inflationary pressures are rising again and economic growth is coming under pressure. The longer the Middle East conflict drags on, the greater these problems become. And there are currently no signs of breakthrough in talks to end the fighting.

Could corporate earnings collapse in the fallout? It’s possible. But that’s not the only reason why stock investors have become more fearful. Financial markets are also tough to read at the moment.

For instance, gold is one of the most popular classic safe-haven assets during periods of economic turbulence and war. So why has the precious metal plunged in recent weeks? It’s because of the resurgent US dollar, though this unexpected turn of events wouldn’t have exactly soothed investor nerves.

Looking long term

But here’s the thing: market volatility is nothing new. And over the long term, the direction of stock markets is clearly up.

Let’s take the FTSE 100 again. It struck fresh record highs just shy of 11,000 points in late February before falling as the conflict started. But it overcame a multitude of crises down the years to get there, from banking sector meltdowns and European sovereign debt crises, to the bursting of tech bubbles and global pandemics.

ISA investors that bought in during the depth of these crises often managed to substantially boost their returns. They snapped up quality companies when stock markets were low, and booked big profits when share prices eventually recovered. The same opportunity has materialised for investors today.

Here’s what I’m doing

I’ve been busy bargain hunting myself, and recently added more Aviva (LSE:AV.) shares for my portfolio. The FTSE stock has recovered from March’s lows, but it still offers tremendous value today.

At 640p, Aviva’s share price has a price-to-earnings-to-growth (PEG) ratio of just 0.1, below the value watermark of one. Its dividend yield, meanwhile is a blue chip smashing 6.5%. Sure, the business faces danger as consumer spending comes under fresh pressure. Yet at these prices it was too cheap for me to ignore.

And critically, Aviva shares still have the capacity to deliver exceptional long-term returns. Its insurance, retirement, and wealth markets are set to rocket thanks to favourable demographic trends. And the company has brilliant brand power and balance sheet strength to capitalise on this.

The post Nervous about investing in a Stocks & Shares ISA? Read this first appeared first on The Motley Fool UK.

I was curious to see which of the three ChatGPT liked the look of – and whether I agreed or disagreed with its choice. Here are the results.

Question: “Which stock should I buy: Aviva, Diageo or BAE Systems?”

Before taking a look at the answer, I should mention that using ChatGPT is more for fun than anything else. It’s not a financial advisor and shouldn’t be relied on as one. Also, I’ve had to make the somewhat time-consuming task of checking all the details in the following table so there aren’t any hallucinations as it can come up with some howlers.

With that out of the way, let’s take a look!

BAE Systems — Best for growth + momentum	Diageo — Turnaround / value play	Aviva — Income / steady dividend
Strong earnings: profit up ~12% and record order backlog (£83bn)	Facing weak demand and guidance cuts, especially in the US	Insurance = typically stable cash flow + dividends
Benefiting from a global surge in defence spending (Ukraine, NATO budgets, etc)	Dividend cut + falling sales → investor confidence hit	Less exciting growth than defence
Analysts broadly rate it a “moderate buy” with upside targets in the £20+ range	Some see it as undervalued after a big drop	Benefits from higher interest rates (improves returns on investments)
Shares already up strongly in 2026 and near highs

What’s its number one pick? BAE Systems – ChatGPT reckons it’s the best overall package.

The stocks

For my money, I can see why there’s so much attention on Diageo these days. It’s a great company with great brands and the share price is down 67%. If there’s a stock that’s going to have people say ‘of course that was a time to buy the dip‘ in a few years’ time then this very well could be it.

The other side of the coin is that we are very much in uncharted territory when it comes to changing consumer habits. Maybe people are going to turn off alcohol the same way they did for cigarettes. That’s the fear, anyway.

The reasons Aviva is a popular stock nowadays is almost the opposite. The share price has been on a terrific run – shareholders could have tripled a stake since 2020. It’s also paying some of the highest dividends on the FTSE 100. What’s not to love?

Valuation might be one drawback. The price-to-earnings ratio of 24 is high for the sector. Folks don’t tend to look towards insurers for stocks with high expectations of growth for the future.

Worth it?

As for the last choice, BAE Systems has been a popular stock on this website for years, and I’m not surprised. Defence manufacturing is one area where Britain is still world-class, and the huge shifts in government spending have given the firm a record order backlog that has just increased past the £80bn mark.

It’s been a strange period for geopolitics, in fairness. If a more peaceful few years are coming (as I’m sure we’re all hoping for) then this could impact the stock negatively. And it must be said, that’s an ethical reason some may wish to steer clear too.

As for my own choice, I actually own all three already. And in the case of BAE Systems, the stock has grown to a large enough part of my portfolio that I’m not thinking about buying more to become overexposed. To a new investor though? I think it’s worth considering.

The post I asked ChatGPT if I should buy Aviva, Diageo or BAE Systems stock and it said… appeared first on The Motley Fool UK.

I don’t think it’s unfair to say the above was a somewhat common sentiment a few years ago. But anyone saying something along those lines would be eating their words today. That’s because what has happened since the Aviva share price hit a low of 228p in March 2020 has been rather remarkable…

Extraordinary

To begin with, the rise of the dividend has been extraordinary. The total payment has been increased every year since then, often by double-digit percentages. Last year’s payment of 39p is around a 6%-7% yield for anyone buying a year ago – but is a 17% effective yield for anyone who snaffled the shares at the 2020 low.

These kind of ballooning dividends are often accompanied by a surging share price, and that’s certainly the case here. The share price rose from 228p to 626p over the period. While the price has dipped since the Middle East conflict erupted, at its higher level earlier in the year, investors would have tripled their stake.

What explains such brilliant performance? And could Aviva shares achieve a similar result in another six years’ time?

Buy the dip

Well, the first thing to point out here is that 2020 was a 10-year low for the share price. The consequences of the COVID-19 pandemic were severe for the finance and insurance sector. And it affected Aviva more than most. It was simply a golden opportunity to ‘buy the dip‘. This is yet another reminder of how buying stocks at times of panic can often be extremely rewarding.

That’s not to take away from company performance over the period. The decision to streamline operations and focus more on the UK and Ireland portion of the business is working wonders, and it has been achieved under the stewardship of CEO Amanda Blanc. Good management and company culture are one of those ‘intangibles’ that can keep a business firing on all cylinders over the long run.

The near future promises much with the integration of Direct Line and impressive earnings targets – an 11% growth in earnings per share targeted until 2028 is rare to see from such an established FTSE 100 company. Although this does come with the downside of an elevated valuation. A price-to-earnings ratio of 24 could mean there’s some way to fall if things go sour.

Overall? I will say that a repeat performance of the last six years is unlikely – it was simply that good of a run. But with chunky dividends and ambitious targets for growth, I wouldn’t be surprised to see Avivia shares achieve better-than-average market returns. That’s why I’d say they’re worth considering for an investor today.

The post £5,000 invested in Aviva shares 6 years ago is now worth… appeared first on The Motley Fool UK.

But that’s only part of the story. Over the same period, investors would also have received £3,025 in dividends, lifting the total return to almost double the original investment. Not bad for a ‘boring’ stock. The issue now is whether the insurer can keep compounding from here.

Growing dividend

As the following chart shows, the company has delivered strong dividend compounding in recent years, with dividends per share growing at a compound annual rate of 15.5%.

Chart generated by author

This has not come from luck or one-off gains. It reflects a deeper shift taking place within the business as it moves towards a more capital-light model.

That shift matters because it changes the quality of the earnings base supporting the dividend. Rather than relying purely on traditional, capital-heavy insurance returns, a growing share of profits now comes from wealth, pensions and fee-based businesses.

These areas generate more predictable cash flows and require less balance sheet strain, which in turn supports higher and more sustainable capital returns over time.

In simple terms, the company isn’t just paying a dividend — it’s steadily building the capacity to grow it.

Diversified business model

What stands out in Aviva’s latest update is how broad-based the progress has become. Management has already delivered its 2026 targets a full year early and has upgraded its medium-term ambitions. That matters because it signals execution is running ahead of expectations.

Crucially, all parts of the business are now firing on all cylinders. General insurance continues to benefit from scale advantages and disciplined underwriting. Wealth is growing strongly, supported by rising inflows and assets. Retirement and protection also continue to deliver steady, recurring earnings.

In other words, this is no longer a single-driver insurance story.

The key takeaway is that performance is now coming from across the group at the same time, rather than relying on one core engine. That creates a more resilient and self-reinforcing earnings base.

The result is a business that’s not just growing, but compounding faster than the market currently expects.

What could go wrong?

The main risk for Aviva is no longer whether the business is improving (it clearly is) but whether too much of that improvement is already reflected in expectations.

The group has already delivered its 2026 targets ahead of schedule, which raises the bar for future performance. At this stage, even a small slowdown in earnings momentum or capital generation could lead to volatility in sentiment.

There are also more traditional risks. Insurance profitability can be impacted by higher claims inflation, particularly in motor and health. Investment returns also remain sensitive to movements in bond yields and wider financial markets.

Bottom line

Aviva has already delivered a significant transformation in recent years, and the financial results increasingly reflect that shift.

The key question for investors is whether the company’s improvement is already reflected in the share price. With earnings momentum, capital strength and diversified cash generation all moving in the right direction, it’s certainly a business investors may want to take a closer look at. But it’s not the only opportunity on my radar right now.

The post £7,500 invested in Aviva shares 5 years ago is now worth… appeared first on The Motley Fool UK.

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.

The post 5 years ago, £5,000 bought 1,231 Aviva shares. But how many would it buy now? appeared first on The Motley Fool UK.

Slow and steady over the long term

FTSE 100 shares are not necessarily the best companies from an investment perspective.

Many are already large and mature, meaning their growth prospects could be small or non-existent.

With 100 companies in the index, inevitably some will do poorly over time.

So, what is the appeal?

I see it as a question of balancing potential rewards with risk tolerance. While the FTSE 100 may not be stuffed with racy growth options, it does offer access to sizeable, well-established businesses that typically have proven commercial models and staying power.

Over time, that can be a rewarding set of companies in which to invest.

Investing for the decades to come

For example, imagine someone puts £500 per month into a Stocks and Shares ISA and compounds it at 5% annually.

After 41 years, the ISA will be worth over £1m. Yes, that is a long-term timeframe – but it means that for under £20 a day, somebody could realistically aim for a million.

Is a 6% compound annual growth rate realistic for a diversified cross-section of FTSE 100 shares (or, say, an index tracker)?

I think so. At the moment, the index yields around 3.1% from dividends, and I reckon an additional compound annual gain of 3% or so in share price over the long term is feasible.

Building a hand-selected portfolio

As I mentioned above, one approach would simply be to ‘buy the index’ by investing in a tracker fund.

Personally I do not do that, instead preferring to try and choose specific FTSE 100 shares that I think have strong long-term potential.

Of course, even good businesses can go through bad patches, so rather than plumping for a single such blue-chip share, I diversify my portfolio across a few different ones.

One share I reckon investors ought to consider right now is insurer Aviva (LSE: AV).

Thinking about the future

With its 6.2% dividend yield, the FTSE 100 firm could potentially meet the 6% target I mentioned above.

I say potentially because there are a couple of caveats.

Dividends are never guaranteed at any company. Indeed, Aviva cut its payout sharply in 2020.

Another caveat is share price gain potential. Aviva’s share price is up 56% in five years, slightly beating the FTSE 100’s 51% gain. But past performance is not necessarily an indicator of what to expect in future.

As the UK’s largest general insurer, Aviva faces the risk that smaller rivals could try to build market share by competing on price, costing it either market share or profitability.

Still, that scale is also an advantage. The FTSE 100 company is well-established, with deep insurance expertise and a large customer base. I regard those as strong competitive advantages.

The post How much do you need to invest each month into FTSE 100 shares to aim for a million? appeared first on The Motley Fool UK.

Over the same timespan, the FTSE 100 as a whole climbed 51%. Which makes Legal & General look even worse. Yet there’s one consolation. Legal & General is a terrific dividend stock. Today, it boasts the highest trailing yield of the entire FTSE 100, at 8.3%. Does that compensate for that capital loss?

FTSE 100 dividend sums

Now let’s say our £5k investor ploughed every dividend they received back into Legal & General shares. What would they have now?

It’s a complex calculation, so I fed some figures into ChatGPT, and I hope it’s not having one of its regular hallucinations. But the chatbot reckons our investor would have £6,887. So despite the share price drop, they’re sitting on a total return of 38%. Which is a lot better, but still badly trails the FTSE 100 (which at a guess returned almost 70% with dividends reinvested).

So much for past performance. Is the FTSE 100 asset manager and insurer worth considering today?

The question has been on my mind for some time, since I added it to my Self-Invested Personal Pension three years ago. I was seduced by the high yield, and being honest, it’s underperformance too. Investing is often cyclical, and I hoped to bag the stock at a bargain price, then benefit when it swung back into favour.

The Legal & General share price is actually up 12.5% over the last year, so things are starting to look up. There’s a long way to go though.

Generous share buyback

It’s still making money. In full-year 2025, the board posted a 6% increase in core operating profits to £1.62bn. Sadly, that felt just short of expectations, with markets anticipating £1.65bn. It was still enough to fund a £1.2bn share buyback, the group’s biggest ever. In total, the board will return more than £5bn between 2025 and 2027. This suggests that big dividend is sustainable, although we can expect it to rise by just a modest 2% a year from here.

Management is still battling to tidy up a big sprawling business, while seeking out new growth opportunities. If the Iran crisis intensifies, and markets fall, that will hit Legal & General, which has £1.2trn of assets under management. The oil price spike looks set to keep interest rates higher for longer. That will hand investors a higher rate of income from risk-free asset classes such as cash and bonds.

I still think Legal & General is worth considering for income-focused investors. However, they should also check out FTSE 100 rival Aviva. It has a lower trailing yield at 6.2%, but its shares are up an impressive 55% over the last five years.

The post £5,000 invested in Legal & General shares 5 years ago is now worth… appeared first on The Motley Fool UK.

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.

The post £5,000 invested in Aviva shares a month ago is now worth… appeared first on The Motley Fool UK.