Introduction:
Ftse 100 At a current yield of 7.78%, Phoenix Group Holdings is one of the most income-generous stocks in the FTSE 100. But high yield alone isn’t enough. The real question: Can it last?
Key Strengths:
- Operational strength: Phoenix delivered a 22% year-on-year increase in operating cash flow, reaching £1.4 billion.
- Dividend consistency: The latest annual dividend came in at 54p, up from the year before. The company has increased or maintained its dividend in nine of the past eleven years.
- Sustainable growth: It targets £5.1 billion in cumulative cash generation between 2024 and 2026, giving confidence in the sustainability of future payouts.
Expected Return on Investment:
Assuming a 56p per share dividend in 2025, a £1,000 investment today would yield around £79.52 in annual income. Despite a modest share price decline projected in the short term, reinvested dividends could drive healthy total returns over time.
Risk Factors:
While fundamentals look solid, market volatility or tighter regulation in the life insurance sector could affect future earnings. The business also faces growing competition in the bulk annuity space.
Conclusion:
Phoenix Group offers an attractive mix of yield, cash generation, and payout reliability. For income-focused investors with a long-term view, it’s a worthy candidate for deeper consideration.
