Boosting my passive income through dividend stocks is a core part of my investment strategy. High yields are enticing but not crucial. It is important to me that a business can cover the yield on offer and the dividend is consistent.
One stock that could be a good addition to my holdings for consistent passive income and high yields is Phoenix Group (LSE: PHNX).
Saving for retirement
Phoenix is the UK’s largest long-term savings and retirement business. It provides a multitude of products for pensions and savings to help people across different stages of the savings life cycle.
Let’s start by looking at Phoenix’s share price activity. As I write, the shares are trading for 558p. At this time last year, they were trading for 625p, which is a 10% drop over a 12-month period.
Phoenix Group shares have fallen like many other stocks due to macroeconomic issues including rising inflation and interest rates. I view this drop in share price as an opportunity to pick up cheap shares.
High yields and consistent payout
The passive income opportunity alone from Phoenix Group makes it a viable option for my holdings. To start with, the current dividend yield stands at just over 9%. This is more than double the FTSE 100 average yield of 3%-4%.
As I mentioned earlier, it is important that I can secure consistent payouts and I believe Phoenix ticks this box too. In 2022, it paid out 8.3% and in 2021 the figure was 7.5%. Furthermore, in 2020 it paid 6.8%. I’m buoyed by the fact that it has managed to increase its returns regularly. More importantly, it has been able to provide consistent returns in the face of tough economic and geopolitical conditions, namely the pandemic in 2020 and Russia’s invasion of Ukraine last year.
Phoenix has been able to regularly increase dividends due to consistent performance due to a loyal and well established customer base. With over 12m customers through many of its businesses, it is a powerhouse in its respective market.
Risks to consider and my verdict
Although Phoenix’s consistent high yields are attractive, it does possess risks like any other stock. To start with, soaring inflation at present could dent performance and payout. This is because inflation can push insurance premiums higher, leading to consumers cancelling policies.
Linked to this, the cost-of-living crisis could impact demand for its products. Not all of its products are essential and in times of economic volatility, consumers may not purchase non-essential products.
Overall I believe Phoenix Group is a great option for passive income for my holdings. I would be willing to buy some shares if I had the spare cash to do so. High yields and a consistent payout are a big factor in my decision making. Furthermore, many large fund management firms have Phoenix shares as part of their portfolio simply for the dividend. If it’s good enough for the experts, then it’s good enough for me.
