By Anna Peel. Originally published at ValueWalk.
- Phoenix Group Holdings PLC (LON:PHNX) has announced its full year results, and revealed a new dividend policy which raises the prospect of more regular increases in dividends to shareholders.
Q4 2021 hedge fund letters, conferences and more
- The results showed the group performing ahead of plan in generating synergies from integrating the recently acquired ReAssure and Standard Life businesses and a significant uptick in the rate of new business generation.
- Phoenix generated £1.72bn of cash during the year, maintaining a £5.3bn capital surplus and boosting its Solvency ratio from 164% to 180%. New business long term cash generation jumped from £766m to £1,184m.
- Phoenix believe that their ability to generate sufficient new business to offset the underlying decline in their book of legacy policies is now proven and have moved to a new dividend policy. Going forwards the group now “intends to pay a dividend that is sustainable and grows over time”.
- Phoenix announced a 3% organic increase in the dividend, taking the payout for FY2021 to 48.9p per share. Phoenix Group shares responded to the news with a rise of 3% in early trading this morning.
A Pivotal Moment For Phoenix
Steve Clayton, fund manager of the HL Select UK Income Shares fund, which holds a position in Phoenix said:
“This is a pivotal moment for Phoenix. Ever since the Standard Life acquisition the group has been talking about “proving the wedge”. The revelation that new business is now more than offsetting the natural decline of the acquired legacy books upon which the group is built shows that the group is now driving its own destiny organically.
The dividend increase announced today leaves the stock trading on a very attractive yield of 7.8%. Phoenix’s challenge is now to prove that they can indeed maintain their new business capabilities and support the growth of their dividend into the future.”
About Hargreaves Lansdown
Almost 1.7 million clients trust us with £141.2 billion (as at 31 December 2021), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.
Updated on
Sign up for ValueWalk’s free newsletter here.
