Phoenix Group Holding (LSE: PHNX) is now a standout FTSE 100 inventory for buyers searching for excessive ranges of passive earnings.

Immediately, it has a shocking trailing dividend yield of 8.4%. Higher nonetheless, the Phoenix share price has jumped 30% within the final 12 months. That lifts the whole 12-month return in the direction of 40%. Not dangerous for what I as soon as noticed as a sleepy old-school blue-chip.

I maintain Phoenix however don’t count on it to rise like that yearly. It seems to be respectable worth with a price-to-earnings ratio of 14.1, however Phoenix is extra about earnings than development. And what an earnings.

The board is pursuing a “progressive and sustainable dividend policy”, which it says is backed by a strong stability sheet and reliable money flows.

Payouts are dazzling

The dividend seems to be moderately strong. Forecasts counsel yields of 8.68% in 2025 and eight.93% in 2026. That’s greater than double what money financial savings pay. In fact, financial savings are secure. Dividends aren’t.

Regardless of its sturdy run, the share price nonetheless trades round the place it did 10 years in the past. That’s a fear, though buyers would have gotten loads of dividends to compensate.

Phoenix goals to generate £1.1bn of extra money by 2026. A few of that can go to paying down debt, however the remaining ought to hold fuelling dividends.

The board’s exploring new areas of income, comparable to bulk annuities and office pensions. It wants to take action to maintain the money flowing, and the dividend supported.

Dangers are nonetheless on the market

There are dangers. The annuity market’s crowded. Insurance coverage is a mature, crowded enterprise. And whereas money yields are falling, they nonetheless supply extra certainty than shares. That might maintain again earnings performs like this.

Markets stay risky too. Any wobble might hit the £280bn of property Phoenix manages.

Nonetheless, the earnings’s the factor. I caught myself questioning, what if somebody went all in? It will break each rule of diversification, however what wouldn’t it take to make £10,000 a 12 months?

Given this 12 months’s forecast dividend of 56p a share, up 3.7% on final 12 months, they’d want 17,857 Phoenix shares. At 644p every, that may price round £115,000. It’s an terrible lot to place into only one inventory. However it could additionally ship an entire heap of earnings.

One for the lengthy haul

Right here’s one thing to chill my passion. Merrill Lynch has simply downgraded Phoenix from Purchase to Impartial, citing sturdy latest good points. It nonetheless sees the yield as interesting, however warns the hole over bonds is narrowing. Shareholders’ fairness’s set to fall till 2027, which might unsettle some and hit demand for the inventory, and its share price.

There’s an previous saying that diversification is the one free lunch in investing. So we most likely shouldn’t cross on that. Additionally, for my very own portfolio, feasting purely on Phoenix would imply shunning a tray of tasty FTSE 100 shares that I’d additionally wish to personal. So I’ll restrain myself.

By no means thoughts. I do assume it’s value buyers contemplating although. As for me, retirement’s greater than 10 years away, and I’ll simply hold reinvesting each Phoenix dividend I obtain. I doubt I’ll ever maintain sufficient inventory to earn £10,000 a 12 months in dividends. However with luck, Phoenix ought to nonetheless give me an terrible lot of passive earnings over time.