Aviva (LSE: AV.) shares have been on a roll these days. They’re up 14.5% within the final six months, 11.3% 12 months up to now, and a formidable 25.2% during the last 12 months. That’s excluding its chunky dividend yield, which I’ll contact on later.

They’ve outperformed the FTSE 100 throughout all three time intervals. Whereas shopping for index trackers is a great strategy to make investments, choosing particular person shares actually has its advantages.

With that in thoughts, would Aviva make a sensible purchase immediately? I’m in search of the following addition to my portfolio and Aviva is excessive up on my watchlist.

I ask myself this query each time I take into account investing in a enterprise, may I see me holding its shares for the following decade?

Brief-term dangers?

With Aviva, I’d say I do. However earlier than I clarify why, I wish to handle the dangers I see. One of many foremost ones is competitors. The insurance coverage trade’s extremely aggressive and particularly with the rise of insurtechs, Aviva should stave off loads of threats within the years to come back.

On prime of that, excessive rates of interest are unhealthy information for the enterprise. A delay in price cuts may spell bother.

Lengthy-term good points?

But when I see a enterprise with loads of development potential on a powerful trajectory, I’m pleased to trip some short-term peaks and troughs. With Aviva, I do.

I say that primarily due to its current turnaround. A few years in the past, Aviva was an inflated enterprise unfold too thinly throughout too many markets and areas. CEO Amanda Blanc has made good progress in streamlining the enterprise.

In current quarters Aviva has offloaded underperforming models and centered extra on people who generate probably the most revenue. For instance, in Q1 the enterprise exited its Singapore three way partnership for a complete consideration of over £900m.

On the similar time, it accomplished the acquisition of AIG’s UK safety enterprise for £453m. It’s inserting better emphasis on the UK market in order that transfer is sensible.

Passive earnings

I discussed on the prime in regards to the passive earnings potential with Aviva by means of its meaty yield. That’s another excuse I may see the inventory being a sensible addition to my portfolio for the years to come back.

As I write, it yields 6.9%. That’s approach above the FTSE 100 common of three.6% and there are simply eight shares that provide the next payout. A kind of is Vodafone, which is slicing its payout in half from subsequent 12 months. So in principle, there’ll solely be seven.

I reckon we may see its payout climb within the instances forward. Final 12 months, it boosted its complete dividend by 8% to 33.4p per share. Its ahead yield for this 12 months’s 7.1%. By 2026, that’s forecast to rise to eight.4%.

Whereas after all that’s solely a prediction, it could place it sixth highest yielder on the FTSE 100 as issues stand. Not unhealthy. Alongside rising its dividend final 12 months, the agency introduced a £300m share buyback programme.

So the urge for food from administration to reward shareholders is clearly there, which is at all times good to see.

Good purchase?

I reckon Aviva might be a shrewd purchase for me immediately for the following decade because it continues with its streamlining mission. I’m eager to select up some shares.