Prospec­tive div­i­dend yield: 6.8%

Shares - - MONEY MATTERS -

THIS COMPANY SPE­CIALISES in buy­ing port­fo­lios of life in­surance poli­cies which are closed to new busi­ness and then man­ag­ing them ef­fi­ciently so they de­liver plenty of cash flow which can be re­turned to share­hold­ers.

The company boosted its as­sets un­der man­age­ment through the £935m ac­qui­si­tion of Abbey Life As­sur­ance last Septem­ber.

It is try­ing to en­hance the qual­ity of its cash stream and its du­ra­tion by re­leas­ing tied up cap­i­tal or do­ing deals to add to its book.

This strat­egy puts the company in a dif­fer­ent cat­e­gory to stocks which are on a high yield due to jus­ti­fied scep­ti­cism over their abil­ity to main­tain the div­i­dend.

Beren­berg an­a­lyst Trevor Moss ar­gues Phoenix’s is ‘one of the most se­cure and should be for many years to come’.

The div­i­dend pay­ment looks set to rise as the company does fur­ther deals, with man­age­ment on record as say­ing it has fire­power of £500m for M&A.

There should be plenty of op­por­tu­ni­ties to put this money to work as Moss ex­plains. ‘The in­dus­try dy­nam­ics con­tinue to change, with com­pa­nies look­ing to be­come more like as­set man­agers, be more cap­i­tal light, fo­cus on digital mod­els, re­lease trapped cap­i­tal or sim­ply fo­cus on what they are best at do­ing,’ he says. (TS)

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