In 1 year, the Phoenix share price could turn £1,000 into…
The Phoenix Group (LSE:PHNX) share price has had a pretty terrific first half in 2025, climbing by over 25%. And yet, despite this upward trajectory, continued dividend hikes by management means investors can still secure an impressive 8.4% yield.
Of course, a high yield's worthless if the dividend can't be sustained. Yet, looking at the group's latest results, that doesn't seem to be a major issue for Phoenix. Operating cash generation in 2024 grew 22% to £1.4bn. That was firmly ahead of expectations, with management not initially expecting to reach this level until 2026. Needless to say, hitting financial targets two years early is an encouraging sign.
To top things off, the group's Solvency II Shareholder Capital Coverage ratio also stands tall at 172%. In other words, the balance sheet has ample financial resources to act as a buffer should macroeconomic conditions take a turn for the worse.
With that in mind, it's not hard to see why income investors are excited about what the future holds. So how much money can investors make with a £1,000 investment today?
Investing in high-quality businesses for the long term is a proven strategy for building wealth in the stock market. However, valuation can have a significant impact on performance. And right now, despite the strong financial results, it seems most of this growth's already baked into Phoenix Group's share price.
The most optimistic price forecast currently projects this stock could rise to 718p if its new private market-focused investment products prove popular among customers. That's roughly 11% higher than where the shares currently trade, suggesting that a £1,000 investment today could be worth £1,110 by this time next year, along with an extra £84 from dividends.
However, as previously stated, this is the most optimistic forecast. By comparison, Berenberg Bank, Morgan Stanley, and Bank of America all have price targets between 640p and 650p, suggesting the stock's already fairly valued. If these more conservative projections prove correct, the returns on a £1,000 investment could be almost entirely driven by dividends.
An 8.4% gain from shareholder payouts is nothing to scoff at. After all, that's roughly double what most high-interest savings accounts currently offer. And with dividends expected to grow further next year, this yield could climb even higher if the Phoenix share price does decide to remain stagnant.
However, it's important to highlight some key risks surrounding this business. Like many insurance businesses, Phoenix is highly sensitive to changes in interest rates. While the business currently boasts a large capital buffer, volatility induced by shifting interest rates could harm asset values, applying pressure on the group's solvency ratios and, in turn, dividends.
Another significant threat to watch carefully is the group's ongoing pivot to becoming a more capital-light enterprise. I've already highlighted the potential gains from management expanding its private market offer. However, success in this strategy is far from guaranteed. And if customers are reluctant to explore these new opportunities, growth could fall short of expectations.
All things considered, Phoenix could be a compelling income investment to consider. However, it comes with considerable risks that management doesn't necessarily have a high level of control over. And with other lower-risk income opportunities to explore, I'm not rushing to buy right now.
The post In 1 year, the Phoenix share price could turn £1,000 into… appeared first on The Motley Fool UK.
More reading
5 Stocks For Trying To Build Wealth After 50
One Top Growth Stock from the Motley Fool
Bank of America is an advertising partner of Motley Fool Money. Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
16 minutes ago
- Yahoo
Raise taxes to bring down energy bills, British Gas boss tells Reeves
The boss of British Gas owner Centrica has urged Rachel Reeves to raise taxes to bring down energy bills. Chris O'Shea said the Chancellor must act to prevent hard-up households from shouldering the cost of Ed Miliband's net zero transition. In particular, he signalled that Centrica would support plans to shift green levies from household bills to general taxation. Speaking on BBC Radio 4's Broadcasting House, he said: 'The cost of the energy transition is not small. 'It's not because renewables are expensive, it's just because we have an energy system that was designed for a world that no longer exists, so we're having to upgrade the energy system and that requires a quite substantial investment. 'At the moment, the costs for doing that come off consumer bills. There is an option to put that on general taxation and that's something that we would support at Centrica.' Mr O'Shea acknowledged that the Chancellor was facing significant financial pressures, especially ahead of the upcoming spending review. However, he said: 'The reality is that we as a country have to pay for the upgrade of the energy infrastructure, either through bills or through general taxation.' His comments come amid mounting scrutiny over so-called green levies, which are charges added to household energy bills to help fund renewables such as wind and solar. These are seen as key to supporting Mr Miliband's target of reaching net zero by 2050. However, critics have accused the Energy Secretary of failing to tackle sky-high energy bills. The Climate Change Committee, which advises the Government on its emissions targets, has said that green levies should be removed from household costs and shifted either on to gas bills or general taxation. In a report last month, the quango said it was concerned that high electricity bills were preventing consumers from buying heat pumps and electric cars, which in turn was slowing down the energy transition. Business leaders have also urged Mr Miliband to scrap green levies as British companies grapple with the highest electricity prices of anywhere in the developed world. Rain Newton-Smith, the director general of the Confederation for British Industry (CBI), last week warned that the net zero costs were acting as an 'anchor' on UK ambitions. Household energy bills are set to fall next month after regulator Ofgem said it would lower the price cap by £129. Nevertheless, high energy costs remain a key political concern, especially as Britain ploughs ahead with a costly transition to renewable sources. In a sign of tensions over Labour's net zero strategy, Sir Keir Starmer has intervened in controversial proposals to make homes and businesses in the South pay more for power than those in the North. Supporters of so-called zonal pricing, which is under consideration by Mr Miliband, claim the switch would lead to savings of £52bn for consumers. Mr O'Shea said increasing energy storage would help to lower prices, but warned that other measures would amount to simply redistributing costs. He said: 'If we're just talking about reallocating things then the cost has to be met by the country. The question is who in the country meets that cost – is it consumers, is it businesses, is it the taxpayer?' The comments come a month after Centrica faced a shareholder backlash over Mr O'Shea's £4.3m pay package. The energy chief was handed a 29pc salary increase, though his total pay was down sharply on the year before, when it ballooned to £8m thanks to a bonus. Mr O'Shea has previously said it was 'impossible to justify' his pay when millions of households are struggling with their bills.
Yahoo
21 minutes ago
- Yahoo
Clock is ticking: Prince of Wales issues appeal for urgent global action to protect oceans
The UK's Prince William issued an appeal Sunday for urgent global action to protect oceans during a speech at the Blue Economy and Finance Forum in Monaco.
Yahoo
21 minutes ago
- Yahoo
Here's How You Can Earn $100 In Passive Income By Investing In Becton Dickinson Stock
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Becton, Dickinson and Co. (NYSE:BDX) develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products worldwide. The 52-week range of Becton Dickinson stock price was $163.33 to $251.99. Becton Dickinson's dividend yield is 2.44%. It paid $4.16 per share in dividends during the last 12 months. Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Invest Where It Hurts — And Help Millions Heal: On May 1, the company announced its Q2 2025 earnings, posting adjusted EPS of $3.35, beating the consensus estimate of $3.28, while revenues of $5.27 billion came in below the consensus of $5.35 billion, as reported by Benzinga. 'Amid a difficult operating environment impacting near-term organic revenue growth, our Q2 results reflect the strength of our business model and ability to exceed our earnings expectations through quality gross margin improvement,' said CEO Tom Polen. The company now expects full-year 2025 revenues to be between $21.8 billion and $21.9 billion, compared with its previously issued guidance of $21.7 billion to $21.9 billion. Check out this article by Benzinga for six analysts' insights on Becton Dickinson. Trending: If there was a new fund backed by Jeff Bezos offering a ? If you want to make $100 per month — $1,200 annually — from Becton Dickinson dividends, your investment value needs to be approximately $49,180, which is around 288 shares at $170.66 each. Understanding the dividend yield calculations: When making an estimate, you need two key variables — the desired annual income ($1,200) and the dividend yield (2.44% in this case). So, $1,200 / 0.0244 = $49,180 to generate an income of $100 per month. You can calculate the dividend yield by dividing the annual dividend payments by the current price of the dividend yield can change over time. This is the outcome of fluctuating stock prices and dividend payments on a rolling basis. For instance, assume a stock that pays $2 as an annual dividend is priced at $50. Its dividend yield would be $2/$50 = 4%. If the stock price rises to $60, the dividend yield drops to 3.33% ($2/$60). A drop in stock price to $40 will have an inverse effect and increase the dividend yield to 5% ($2/$40). In summary, income-focused investors may find Becton Dickinson stock an attractive option for making a steady income of $100 per month by owning 288 shares of stock. There may be more upside to come as investors benefit from the company's consistent dividend hikes. Becton Dickinson has raised its dividend consecutively for the last 53 years. Real estate is a great way to diversify your portfolio and earn high returns, but it can also be a big hassle. Luckily, there are other ways to tap into the power of real estate without owning property. Arrived Home's Private Credit Fund's has historically paid an annualized dividend yield of 8.1%*, which provides access to a pool of short-term loans backed by residential real estate. The best part? Unlike other private credit funds, Looking for fractional real estate investment opportunities? The features the latest offerings. Image: Shutterstock This article Here's How You Can Earn $100 In Passive Income By Investing In Becton Dickinson Stock originally appeared on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
