ii view: higher yielder Standard Life bumps up dividend

Full-year results to 31 December 2025

• Operating cash generated up 5% to £1.47 billion
• Reported loss of £394 million, improved from 2024’s loss of £1.08 billion
• Adjusted operating profit up 15% to £945 million
• Capital cushion or Shareholder Capital Coverage Ratio up 4% to 176%
• Final dividend of 28.05p per share
• Total 2025 dividend up 2.6% to 55.4p per share

Guidance:

• Continues to target cumulative three-year total cash generation of £5.1 billion between 2024 and 2026
• Continues to target adjusted operating profit of £1.1 billion in 2026

Chief executive Andy Briggs said:

“Operating as Standard Life plc brings our most trusted brand to the forefront, demonstrating our commitment to helping our customers achieve better outcomes and greater financial security in later life. We look to the future with confidence."

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ii round-up:

Standard Life (LSE:SDLF) reported an annual gain in operating cash generation that matched City forecasts, allowing the retirement savings and income specialist to increase its already substantial dividend payment. 

A 14% increase in pension customers and a near trebling in cost savings year-over-year contributed to a 15% rise in operating cash generated to £1.47 billion. A final dividend of 28.05p per share, payable to eligible shareholders on 20 May, takes the total payment for 2025 up 2.6% to 55.4p per share. 

Shares in the FTSE 100 company fell marginally in post results trading having come into these latest results up by 45% last year. That’s similar to rival Aviva (LSE:AV.). The FTSE 100 index rose by just over a fifth in 2025. 

The company, which recently changed its name from Phoenix Group, has acquired over 100 insurance brands in its time including Pearl Assurance and Abbey Life. Other operating brands today include SunLife and ReAssure.  

Adjusted operating profit rose 15% to £945 million, leaving Standard on target to achieve a goal of £1.1 billion in such profits by the end of 2026. 

A reported loss after tax of £394 million in 2025 improved from a loss of £1.08 billion in 2024, hindered by costs for hedging policies taken to protect the group’s capital cushion against interest rate and equity market volatility.   

A capital cushion, or Shareholder Capital Coverage Ratio (SCCR) of 176% was up from last year’s 172%. 

Standard reiterated its target for achieving cumulative three-year total cash generation of £5.1 billion between 2024 and 2026, with cash of £3.5 billion generated to the end of 2025.

Broker UBS reiterated its ‘buy’ rating following the results, highlighting a price target of 810p. 

ii view:

Begun in 1857, Standard Life today supports 12 million customers in managing £317 billion of assets under administration. The group’s day-to-day businesses includes three million workplace pension customers as well as payment solutions for both companies and individuals via pension risk transfer facilities and annuities. 

Fierce competition and pressure on life and pensions providers to reduce costs has allowed Standard Life to grow via acquisitions and then strip costs. Debt acquired in the process is now being reduced, aided by ongoing cash generation.   

For investors, hedging policies executed to protect the group’s capital cushion have and may continue to hinder fully reported profits. Consumer cost pressures such as rising energy bills could push some customers to reduce pension contributions, while an estimated share price-to-net asset value above the three-year average may suggest the shares are not obviously cheap. 

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To the upside, the company remains on track to meet management targets for cash generation and adjusted profit. A change of name to Standard Life should make the group more recognizable to potential new customers and help reduce costs. The company’s SCCR remains within management’s target range, while a push to cut group debt is ongoing. 

On balance, and despite continuing risks, more than five years of consecutive annual dividend increases and a forecast dividend yield of around 8% should remain attractive to income seekers. 

Positives: 

• Potential for more bolt-on acquisitions
• Attractive dividend payment (not guaranteed)

Negatives:

• Regulatory changes can impact
• Uncertain economic outlook

The average rating of stock market analysts:

Strong hold