What occurred to Aviva (LSE: AV.) shares at present (5 March)? I see one other nice set of outcomes, one other dividend rise, one other share buyback, and one other glad shareholder. The latter is me, and I hope there are lots extra of us. However the share worth fell 2.5% quickly after the market opened.
Does it imply traders had been anticipating what we noticed, and have been dissatisfied? Or is the valuation excessive sufficient on the present worth? Let’s have a look how the 2025 full 12 months went.
“Excellent”
Within the phrases of CEO Amanda Blanc, Aviva achieved “an excellent efficiency in 2025, our fifth consecutive 12 months of sturdy, worthwhile development.” Working revenue is up 25% to £2.2bn. And working earnings per share (EPS) gained 17% to 56p — although bottom-line reported EPS got here in decrease at 26.9p.
The enterprise is clearly throwing off loads of money. There’s a brand new share buyback price as much as £350m, anticipated to occur between March and August.
And the board lifted its annual dividend by a formidable 10%, to 39.3p per share – properly forward of analyst forecasts. On yesterday’s closing worth for Aviva shares, that’s a dividend yield of 5.9%. So we’ve got a dividend forward of the FTSE 100 common, and a progressive rise nicely forward of inflation.
And to show again to the enthusiastic CEO, she instructed us: “We’ve got achieved our 2026 monetary targets one 12 months early, highlighting the fast and sustained progress we’re making.” She added that Aviva is “extremely dedicated to rising our dividend.” And that appeals to long-term dividend traders like me.
What’s it price?
The principle hazard most likely centres on the cyclical nature of the insurance coverage sector, and Aviva’s present valuation. On the reported EPS determine, we’re taking a look at a trailing price-to-earnings ratio of 24. Even on the upper working EPS, we’re nonetheless taking a look at a a number of near 12.
A number of years in the past, Aviva shares have been on a P/E of solely round six or seven. However proper now? I’m undecided I see sufficient security margin in that to deal with one other cyclical downturn.
It’s on no account certain we’ll have a downturn. And if we do, it may not occur within the coming decade. However over all of the years I’ve been following the sector, it’s proven probably the most ups and downs I can bear in mind out of any within the FTSE 100. However you already know, each downturn got here again up once more.
Stronger firm now
In 2025, Aviva maintained its primary place within the UK insurance coverage market and quantity three in Eire, with over 12m prospects. And within the UK and Eire collectively, gross written premiums rose by 27% — by a mix of quantity and profitability.
Amanda Blanc actually has labored wonders for Aviva. It’s way more targeted and environment friendly than it was when she took over in 2020.
Even when Aviva may not be on a screaming low-cost valuation now, I just like the underlying firm. We would see a weak spell for the shares, however I’m holding. I feel long-term traders ought to think about shopping for, particularly on any dips.
The put up What subsequent for Aviva shares after a cracking set of 2025 outcomes? appeared first on The Motley Idiot UK.
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Alan Oscroft has positions in Aviva Plc. The Motley Idiot UK has no place in any of the shares talked about. Views expressed on the businesses talked about on this article are these of the author and subsequently could differ from the official suggestions we make in our subscription companies resembling Share Advisor, Hidden Winners and Professional. Right here at The Motley Idiot we consider that contemplating a various vary of insights makes us higher traders.
