Standard Life’s share price won’t recover simply because Standard Life is no longer quoted, instead it is now part of Phoenix Group and has been since September 2018.
Prior to that the fund manager had merged with its local rival Aberdeen who retained the Standard Life brand name until 2021, when it also sold that to Phoenix Group.
Phoenix Group was specifically set up to become a consolidator in the retirement and longterm savings space and it is now one of the biggest providers in these areas in the UK.
Phoenix Group’s share price has performed well recently and over the last year is up almost 30%. Which is about the same as Aviva, but considerably better than Legal & General who’s shares are flat.
Phoenix Group has the dubious distinction of having the highest dividend yield in the FTSE 100 at 8.4%.
Which makes it a great income investment as PHNX has a record of continuous dividend payments and dividend maintenance.
Phoenix can also point to an 8-year track record of dividend growth. However its 10- year dividend growth rate of just +2.78% is nothing to write home about.
Phoenix Group might suit adventurous income investors, with a diversified portfolio or those betting on recovery in the pensions and savings arena.
Why has the Phoenix share price been falling over the past five years? Well, when it last reported in September 2024, the business was generating operating-cash-flow of £64.0 million and adjusted operating profits of £360.0 million. It had £289.0 billion of assets under management for its 12.0 million customers.
However, despite this the group reported a loss of -£646.0 million thanks to additional solvency provisions, what it called elevated non-operational costs, and the accounting impact of the buyout of its own internal pensions scheme.
The bulk of these may well be one-off items, driven by accounting prudence, and thus are not cash items, but it’s still a significant loss however you dice it.
That probably goes some way to explain why Phoenix Group is under-owned by institutional investors relative to its insurance sector peers, according to broker UBS, who recently highlighted a preference for European names like AXA and Aegon among institutions.
The Swiss bank downgraded Phoenix Group to neutral from buy, in October and cut its price target to 530p from 610p as it did so.
The shares currently trade at 643p but are still trading below their five-year highs around 780p. Is Pheonix a buy from here? Not for me. There are 12 analysts who publish 12-month price targets for Phoenix Group Holdings PLC are not so bullish with a price target of 636.50
It is only independent analysts that have bullish price targets, Goldman Sachs, J.P. Morgan and Barclays all see it as overvalued. But is Pheonix Group a short? Probably not either, the only significant hedge fund short position is Blackrock since 2018, maybe it’s just an in-the-middle hold if you’re a dividend investor in my opinion.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
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