Phoenix Group Holdings (LSE: PHNX) could also be an excellent inventory for buyers who wish to get the utmost quantity of second revenue they will. 

The pensions, financial savings, and life insurer presents the very best dividend yield on the FTSE 100, presently paying 10.18% a 12 months. Higher nonetheless, for buyers who like a cut price, the Phoenix share price has fallen 10.49% within the final month. Meaning a decrease entry price, increased revenue.

I purchased Phoenix in January and once more in March. Ought to I take this chance to make it a hat-trick of purchases?

Stellar FTSE 100 dividend share

I’ve acquired two beneficiant dividend funds already and the third will hit my account on 31 October. For some time, I used to be having fun with share price development as nicely, however alas, the final month’s sell-off modified that and I’m again the place I started.

If immediately’s yield holds, I’ll double my cash in simply over seven years. Phoenix has a bit good monitor report of dividend hikes, as this chart exhibits.

Chart by TradingView

There’s an apparent downside, although. Will the share price ever develop? And this begs a second query. Does it matter if it doesn’t?

To be honest, Phoenix shares are up 11.14% over the past 12 months. The draw back is that they’re down 25.72% over 5. That double-digit yield gained’t look fairly so unmissable if my capital is being eroded on the similar time.

At first look, markets seem to have been exhausting on Phoenix. In full-year 2023, it delivered a strong 13% enhance in IFRS-adjusted working revenue to £617m, pushed by robust development in its pension and financial savings enterprise.

It seems to start out 2024 in the same vein, posting a 15% enhance in first-half adjusted working income to £360m on 16 September. Nevertheless, the corporate’s accounts are a bit difficult to know, and the headline backside line after tax confirmed a lack of £646m. The board pinned that on “adverse economic variances from higher interest rates and global equities which are the consequence of our SII hedging approach”. Perhaps markets aren’t being that tough on Phoenix in spite of everything.

I’d prefer to see the Phoenix share price rise

The dividend nonetheless appears strong as complete first-half money era jumped 5.8% to £950m. Phoenix is now aiming to hit the highest finish of its £1.4bn to £1.5bn goal vary in 2024. 

The shares may get a elevate with analysts forecasting margins will enhance from 5.7% to 13% this 12 months. The 14 analysts providing one-year price targets have a median projection of 575.5p per share, an increase of 11.14% from immediately’s 517.5p. That’s in all probability as a lot as we will hope for, however would give a complete return of greater than 20%. That’s if it’s right.

Regardless of final month’s dip, Phoenix doesn’t look significantly low-cost, buying and selling at 15.78 occasions earnings, roughly in step with the FTSE 100 common price-to-earnings ratio. The price-to-sales ratio is 1.1, which implies buyers are paying 110p for each £1 in gross sales. 

The corporate must develop to impress buyers, however it’s working in a mature and aggressive market, at an unsure time. It could battle to ship.

I gained’t be promoting my Phoenix shares, however I gained’t purchase extra immediately. They provide an excellent second revenue, however I’m not satisfied I can stay by dividends alone.