Three years ago, I was moments away from buying Aviva (LSE: AV) shares. I was populating my SIPP and it was a toss-up between Aviva and rival FTSE 100 insurer and asset manager Legal & General Group (LSE: LGEN).

Both looked good value, with price-to-earnings (P/E) ratios of six or seven. Both had underperformed for years. Both looked primed for a rebound.

Inflation was still raging then. CPI stood at 10.3% in February 2023, not far below its 11.1% peak the previous October. Higher interest rates and the cost-of-living crisis were weighing on the FTSE 100, which stood at 7,878. But investing is cyclical. I felt rates couldn’t stay that high forever. When they fell, UK shares, especially high-yield dividend stocks, would look way more attractive than boring old bonds and cash. That was the theory, anyway.

FTSE 100 sector rivals

At the time, investors could get risk-free yields of 5% or more, so many felt there was less need to risk capital by investing in equities. I took a different view. Aviva was yielding 7.5%, while Legal & General yielded as much as 10%, with the potential for capital growth on top when their shares recovered. Faced with that choice, I bought Legal & General, seduced by its stunning income.

Broadly, my theory proved right. Base rates have fallen from 5.25% to 3.75% and looks set to drop further. Bond yields and savings rates have followed. The FTSE 100 now trades around 10,780, up 36% in three years. With dividends, total returns are pushing 50%.

High-yield financials have flown, notably Aviva, which is up almost 50% over three years and 30% in the last 12 months, with all dividends on top. Other dividend-paying FTSE 100 financials in my portfolio, Lloyds Banking Group, M&G and Phoenix Group Holdings have also surged. Sadly, there’s been one clear laggard: Legal & General. That’s the bit I got wrong.

Its shares are up around 12% over the last year and a meagre 5% over three years. Yes, investors have pocketed plenty of dividend income, but they’d have got almost as much with Aviva, and enjoyed bags more capital growth.

Legal & General underachieves

I won’t complain too much. I’m sitting on several big winners and there’s no finishing line in investing. I plan to hold these stocks for at least the next decade. Legal & General has time to make up lost ground. As I said, investing is cyclical.

Aviva looks pricier after its strong run, with a trailing P/E of 26.7 and a yield trimmed to 5.4%. Legal & General’s trailing P/E stands at 92, which looks bizarre but reflects three consecutive double-digit falls in earnings per share (which also explains its weaker share price). The trailing yield remains chunky at 7.9%.

On a forward basis, the picture looks calmer. Aviva trades on an undemanding P/E of 11.9 for 2026, with Legal & General on 11.3. Forward yields of 6.36% and 8.35%, respectively, still look fabulous.

So should I buy Aviva now? It was the better bet three years ago and may still have the edge. It has momentum and has streamlined into a sharper business. If starting from scratch, it would be my first choice. But I’m sticking with Legal & General, hoping my patience will ultimately be rewarded. Investing is cyclical, they say.