Interactive Investor

ii view: income king Phoenix Group commits to growing dividend

Pushing new business via well-known brands and using sizeable cost cuts to boost profits. Buy, sell, or hold?

22nd March 2024 11:40

by Keith Bowman from interactive investor

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Full-year results to 31 December 2023

  • Cash generated of £2 billion, up from £1.5 billion in 2022
  • Adjusted operating profit up 13% to £617 million
  • Capital cushion or solvency II ratio down 7% to 176%
  • Final dividend of 26.65p per share
  • Total 2023 dividend up 4% to 52.65p


  • New three-year cash generation goal of £4.4 billion

Chief executive Andy Briggs said:

"Phoenix's vision is to be the UK's leading retirement savings and income business, and we are making great progress in delivering our strategy to achieve this, as our strong 2023 financial results demonstrate.

“The next phase of our strategy will see us balance our investment across our strategic priorities to grow, optimise and enhance our business. This will support us in delivering the ambitious new 2026 targets we are announcing today.”

ii round-up:

Life and pensions company Phoenix Group Holdings (LSE:PHNX) today underlined its emphasis on the dividend as it raised the total payment for 2023 by 4% to 52.65p. 

Full-year 2023 adjusted operating profits climbed 13% to £617 million, but a push to increase sales and cut costs by £250 million is expected to boost adjusted profits to £900 million by 2026. 

Shares in the FTSE 100 company rose 9% in post results trading having come into these latest figures down 14% over the last year. That compares to a fall of 29% for Asia-focused Prudential (LSE:PRU) and contrasts with rises of 16% and 7% respectively for rivals Aviva (LSE:AV.) and Legal & General Group (LSE:LGEN). The FTSE 100 index itself is up 5% over the last year. 

Phoenix has bought and integrated over 100 insurance brands in its time including the likes of Pearl Assurance and Abbey Life, with its core activity brand today being Standard Life. 

Management now targets a three-year cash generation goal of £4.4 billion, with proceeds not only being used to support the progressive dividend policy but also reduce debt by £0.5 billion by 2026 and reduce debt, or the Solvency II leverage ratio down to 30% from 36% currently.

New business net fund flows of £6.7 billion was up 72% year-on-year, fuelled by strong workplace pension flows.

On an IFRS accounting basis, a full-year 2023 loss of £88 million was significantly better than the £2.6 billion loss in 2022. 

Broker UBS reiterated its ‘buy’ stance on the shares post the results, flagging an estimated fair value share price of 600p. A final dividend of 26.65p per share is due to be paid on 22 May.

ii view:

Intense competition and pressure on life and pensions providers to reduce costs has allowed Phoenix to grow via acquisitions and then strip costs. Former brands and related policies such as Sun Life of Canada and ReAssure are now both part of Phoenix. Its open activity business today includes workplace pensions and customer savings divisions. It has around 12 million customers with assets under administration of just over £280 billion. 

For investors, higher borrowing costs could be pushing some customers to reduce savings in order to meet higher loan and mortgage repayments. Its capital cushion fell to 176% from 189% last year, although remains within management’s target of 140% to 180%. A Solvency II leverage ratio of 36% is above an industry average of nearer 22%, while rivals such as Legal & General and Aviva are not standing still. 

On the upside, robust net fund flows helped operating profit at the Pensions and Savings business climb 58% to £395 million. Moves to further digitalise its services should aid its target to cut costs. Activity brand names such as Standard Life and SunLife are relatively well known, while a push to cut group debt is underway. 

For now, and offering a forecast dividend yield of around 10%, income investors will likely remain attracted to the shares, while others might like the growth potential at this life and pensions industry consolidator. 


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


  • Regulatory changes can impact
  • Uncertain economic outlook

The average rating of stock market analysts:


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