Down 10% in a month with a near-7% yield — are Aviva shares the perfect ISA buy?

I’ve been keeping a close eye on Aviva (LSE: AV) shares. I’ve long considered it one of the most complete FTSE 100 stocks, offering both solid share price growth and a generous dividend yield.

The shares have climbed more than 50% over the past five years, while at times yielding as much as 7%-8%. That stellar rate of income comes on top of the capital growth. Unfortunately, I didn’t buy Aviva. Instead, I invested in FTSE 100 rival Legal & General Group, which is far from perfect. While it offers a hugely attractive dividend yield of around 9%, the share price has gone nowhere in the past decade. After a string of false dawns, it’s effectively ending up where it started.

Aviva is a different beast. CEO Amanda Blanc, who took over in July 2020, has led a major turnaround. She has streamlined the business, sharpened its focus and exited lower-growth, non-core operations to concentrate on its most profitable areas.

Rival FTSE 100 insurers

Aviva now offers a broad spread of insurance, wealth, and retirement services. The acquisition of Direct Line has strengthened its position in key UK markets such as motor and home insurance, reinforcing its scale and competitiveness. For a long time, I felt I had missed my chance, and was forced to comfort myself with Legal & General’s dividends. So has the recent pullback has given me a second shot?

The shares are down around 10% in the past month and roughly 10% over the past year. That’s mostly due to Iran uncertainty, coupled with a sense that the shares have run as far as they could. Dips like these can give investors a chance to buy into quality companies they previously felt were too expensive.

This morning, the FTSE 100 has jumped 1.75% on hopes of a possible peace deal involving Iran. Whether that optimism lasts is uncertain. Markets could just as easily reverse tomorrow. There is no clear resolution in sight in my view, and I think recent stock market volatility is likely to continue.

Aviva is participating in the rebound, up around 2.5% today. But its attractive valuation and high yield remain intact. The group currently trades on a forward price-to-earnings ratio of 11.9, with a forward dividend yield of 6.95%.

Strong results, plus buybacks

Aviva delivered another strong set of 2025 results on 5 March. Operating profit rose 25% to £2.3bn, and the board reinstated share buybacks with a new £350m programme. It has also set challenging medium-term targets, including 11% annualised growth in earnings per share between 2025 and 2028. Investors hoped for more, which shows how high expectations have become. But that pullback may now offer a second chance to get in.

Of course, volatility remains a risk. Given Aviva’s exposure to asset and wealth management, it will not be immune if markets weaken further or experience a broader downturn. Stock performance is cyclical, and Aviva may have gone as far as it can.

Even so, with a long-term view, I think it remains a high-quality stock worth considering today. Exactly the kind of business investors should be looking for in uncertain times. I just wish I could say the same about Legal & General.