Shopping for 1,852 shares on this ultra-high yield FTSE 100 earnings inventory would give me £1k a 12 months

The final FTSE 100 earnings inventory I added to my portfolio was the one which pays the largest yield of all. Step ahead, Phoenix Group Holdings (LSE: PHNX), the insurance coverage conglomerate greatest identified to traders for its double-digit yield.

I purchased 218 Phoenix shares on 31 January, adopted by one other 297 on 4 March. In whole, they value me £2,500. I additionally picked up one other 27 shares, once I invested my first dividend on 24 Could, value £137. That’s a comparatively modest whole, however I’m not finished but. I’m contemplating including to my tally, however I’ve one apparent concern. Is that yield for actual?

I wouldn’t have purchased it if I didn’t assume so, nevertheless it nonetheless worries me. Double-digit yields are weak, as any Vodafone investor can let you know.

Can I belief that dividend?

If traders have been satisfied they’d get 10% a 12 months without end, or not less than the subsequent decade, they’d pile in, wouldn’t they? However as ever with dividends, there are not any ensures. But the Phoenix per share dividend progress has been fairly strong, as my desk exhibits.

It has elevated its dividend during the last 4 years by 0.7p, 1.4p, 1.9p, and 1.85p. Markets forecast one other 1.35p uplift in 2024 to 54p. That doesn’t appear to be an organization that’s anxious about funding shareholder payouts.

My desk additionally exhibits that yield has steadily climbed, courtesy of the falling Phoenix share value. It has dropped 14.7% during the last 12 months, and 25% over 5 years. That compares to FTSE 100 progress of 9.1% and 16.2% respectively. So these excessive dividends come at a value.

Personally, I believe markets have been harsh on Phoenix. When it revealed full-year outcomes on 22 March, the share value jumped 8.4% from 488.2p to 529.2p and I felt vindicated. It has since retreated to 502p.

Excessive and likewise rising

I’m baffled. The 2023 numbers have been good, with whole money technology beating the group’s £1.8bn goal to hit £2bn. That can assist fund the dividend but nonetheless the share value flounders.

I believe that’s partly all the way down to wider market situations. Numerous FTSE 100 excessive yielders have bought off recently, as rate of interest minimize hopes recede. That downwards development may reverse when charges do lastly fall, slashing yields on money and bonds. At that time, Phoenix may fly. Except it’s a price entice, that’s.

Immediately, my 542 shares are value £2,720. If analysts are appropriate and the 2024 dividend per share is 54p, that may give me earnings of £292.68.

If I wished to up that to a considerably extra meaty £1,000 a 12 months, I’d want to purchase one other 1,310 shares, lifting my whole to 1,852. Immediately, that may value me £6,576. I don’t have that a lot handy right this moment so I’ll purchase Phoenix in dribs and drabs, making the most of any share value dip. I’ll get there, with luck earlier than the share value kicks on, assuming it ever does. If it doesn’t, not less than I’ll have the earnings.