Recent weakness in the Aviva (LSE: AV) share price might have unsettled investors.

But the insurance, wealth, and retirement products giant has been carrying on business as usual. For shareholders, that means the dividends are still flowing and growing.

The stock snapped back a bit in mid-November. But even at today’s higher level of 483p, the valuation still looks keen. So I think the business is worthy of my further research time and consideration.

I’m on the lookout for a new position for my long-term stocks and shares portfolio. So at first glance, Aviva’s forward-looking dividend yield of more than 7.8% for 2025 looks attractive.

Reinvesting income to build the investment

My approach would involve reinvesting all the dividend income along the way to build an even bigger position in the shares over the coming years. That’s one of the tactics that can help to make sure I’m on the right side of the compounding process.

However, positive outcomes are never guaranteed with shares and businesses. One variable is the share price itself. As we’ve seen, the stock is prone to moving up and down despite constant progressive trading in the underlying business.

Another specific risk with Aviva is the enterprise is vulnerable to the up and down cycles of the general economy. If a recession or downturn is too tough or lasts for a long time, Aviva’s directors may even trim the dividends. If that happens, the share price will likely decline too.

So Aviva’s not as safe as money in the bank. But it does have the potential to deliver higher returns for its shareholders. 

It was November’s third-quarter trading update that caused the stock to jump up. Chief executive Amanda Blanc was upbeat in the report. Third-quarter performance had been “very strong”, and ongoing trading is “extremely positive” across the business.

Blanc is “confident” about the outlook for the rest of 2024 and beyond, and about the firm’s ability to keep on growing its dividend. 

Why I’m dithering

So it seems that while I may have lingering anxiety about the negative effects of cyclicality in the economy, they are not affecting Aviva at the moment. In fact, the business seems to be roaring forward on all cylinders.

City analysts have pencilled in an increase of just over 18% for earnings this year. They expect almost 14% in 2025. Meanwhile, the dividend is forecast to increase by high single-digit percentages this year and next.

That’s why the forward-looking yield is well above 7.8% for 2025, making the valuation look modest.

But I’m still undecided on the stock. One thing that bothers me is the share price has travelled essentially sideways for about 15 years.

Now, I’m no spring chicken, that’s for sure. However, I’m still young enough to hanker after a bit of long-term share-price growth in my diversified portfolio. But I suspect Aviva may not deliver that.

So it’s still on the ‘think about’ pile for me. Meanwhile, I’m also looking at businesses with lower yields and higher dividend-growth rates. Aviva may be worth considering for investors needing a big income now. But I’m still sitting on the fence.