How much in Phoenix Group shares does an investor need for £1k of monthly passive income?

Some FTSE 100 dividend yields might have declined as their underlying share prices have risen, but I still see plenty for passive income investors to choose from.

The insurance business can be cyclical. But it can put a lot of cash into shareholders pockets over the long term.

Winning insurance returns

Right now, I like the look of Phoenix Group Holdings (LSE: PHNX) and its forecast yield of 8.4%. That’s about twice the Footsie’s average dividend yield. It easily beats the FTSE 100 total return of 6.9% average per year over the past 20 years.

It falls short of the average annual 9.6% from Stocks and Shares ISAs in the past decade. But that’s total return again, and the Phoenix 8.4% is only from dividends. Forecasters expect it to reach a 9% yield by 2027, based on the current share price.

Ups and downs

Over the long term, total returns are what matter. And we can see from the above chart that the Phoenix share price has gone pretty much nowhere over the past five years.

It’s actually a 4.5% gain, which is pretty pathetic really. And it’s mostly come from the current year to date. In fact, the shares are up only 5.4% in the past 10 years. So dividends are all that shareholders have had for a decade now — decent ones, at least.

That’s what I mean about companies in this sector being cyclical. Dividends are never guaranteed. And stock performance tends to be hit hard in tough economic times. It’s a risky sector. And diversification is essential to minimise the risk from any particular sector like this.

Better times?

Still, I’m hoping the insurance sector will have a better decade ahead of it. I mean, we still had good returns from dividends. But maybe the market can swing some share price appreciation into the mix.

In fact, with 2024 full-year results delivered in March 2025, CEO Andy Briggs said: “Our strong performance in 2024 and the operating momentum we have built will support us in delivering our growth strategy and have led us to upgrade our cash generation and adjusted operating profit targets through to 2026.”

The company intends to continue its progressive dividend rises, after lifting the 2024 payout by 2.6%.

So how much?

To earn £1,000 per month in passive income from Phoenix Group shares? That’s £12,000 per year. At the forecast 8.4%, we’d need a total pot worth a shade short of £143,000. There are different ways to build up to that amount.

A single £20,000 ISA allowance invested in Phoenix with all dividends reinvested could get there in 25 years. Half an allowance, or £10,000, invested every year could reach the total in less than 10 years.

I must stress again that I’d never put all my money in one stock. But, by carefully selecting a range of dividend shares, these kinds of returns are certainly possible. I might add some Phoenix to the insurance shares I already own.

The post How much in Phoenix Group shares does an investor need for £1k of monthly passive income? appeared first on The Motley Fool UK.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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