MONY Group’s (LSE: MONY) rising cash flows and strong digital business model have brought it front and centre of my income share screener.
With the high cost of living, consumers are switching more in search of savings — across insurance, broadband, travel and energy. And this firm — formerly Moneysupermarket.com — sits in the slipstream of that trend.
This should power earnings growth that could support strong gains in dividend yield, from an already high base. So what sort of returns are we looking at here?
Earnings growth drivers
A risk to MONY’s earnings growth is that revenues are partly tied to consumer switching, which can fluctuate.
However, a combination of comparison fees, lead‑generation commissions and affiliate income provides a more balanced earnings base than a pure switching business. Indeed, analysts forecast MONY’s earnings will increase by around 7% a year to early 2028.
Moreover, insurance switching — the group’s largest division — has continued to recover following the FCA pricing reforms. These forced insurers to align new‑customer and renewal pricing, initially reducing the big price gaps that drive switching. Meanwhile, energy switching, which collapsed during the price‑cap crisis, has been rebuilding as competitive tariffs returned.
And crucially, MONY’s asset-light model keeps capital expenditure low, allowing free cash flow conversion to remain above 80%. This supports both earnings resilience and ongoing dividend growth.
How have the recent results been?
MONY’s 2024 results saw revenue edge up 1.6% to £439.2m as activity improved across key categories. Profit before tax jumped 18% to £108.7m, reflecting firmer trading and good cost discipline.
Adjusted EBITDA rose 6.7% to £141.8m, while adjusted earnings per share (EPS) increased 6.9% to 17.1p. The dividend was lifted 3.3% to 12.5p, marking the group’s continued confidence in cash generation.
These themes continued into H1 2025, with revenue up 1% to £225.3m. Adjusted EBITDA increased 2% to £75.1m, while profit after tax rose 3% to £45.6m. Adjusted EPS grew 4% to 9.3p, as net debt fell 27%.
Big dividend income potential
In 2024, MONY paid a dividend of 12.5p, giving a current yield of 7.5%. This is more than double the FTSE 250 average of 3.5%, and high above the FTSE 100’s 3.1%.
Analysts’ forecast dividends will rise to 13.7p this year, and 14.3p next year, implying yields of 8.2% and 8.6%.
So investors considering a £20,000 holding could make £27,118 in dividends after 10 years. This assumes that the dividends are reinvested back into the shares to exploit the turbocharging effect of dividend compounding. It also factors in the 8.6% forecast yield as an average, although this can go down as well as up over time.
On the same basis, the dividends would increase to £241,525 after 30 years. The value of the holding by then (including the initial £20,000) would be £261,525.
And that would generate a yearly income from dividends of £22,491!
My investment view
I already have several financial sector stocks in my portfolio, and owning another would unbalance it. However, MONY Group is now on my watchlist should the performance of any of these shares dip. For other investors without this problem, I think the stock is worthy of consideration.
