Standard Life (LSE: SDLF) shares remain a core part of my portfolio designed to maximise dividend income in retirement.
The UK’s largest long-term savings and retirement company — until very recently better known as Phoenix Group Holdings — currently yields 7.2%. But analysts forecast that it will rise to 7.4% this year, 7.6% next year, and 7.9% in 2028.
I am not entirely sure when I want to retire yet, as I enjoy what I do. But what if some decided to do so this year? How many Standard Life shares would they need to generate an income that matches the £45,000 mean average UK salary?
How do the numbers stack up?
Assuming this year’s forecast 7.4% dividend yield, they would need a capital pot of £608,108 to hit a £45,000 annual income. This equates to 79,491 shares in Standard Life at the current price of £7.65.
By comparison, the current average dividend yield of the FTSE 100 is just 3.1%. So, they would need more than double the capital pot — £1,451,613 to be precise — in an index tracker to generate the same £45,000 annual income.
That said, these are not the sort of sums to be found down the side of a sofa all of a sudden. But sizeable retirement pots can be generated from relatively small, monthly investments over time, especially if the turbocharging power of ‘dividend compounding’ is used.
But does the business look a solid investment over the long term?
How does the core business look from here?
Earnings growth is the key driver for rising dividends over time. Analysts forecast that Standard Life’s will soar by a whopping average of 48.9% every year over the medium term, at minimum.
A risk to this growth is the high level of competition in the sector that could squeeze the firm’s margins. Another is any further rise in the cost of living, which could prompt clients to cancel their policies.
Nevertheless, its recently released 2025 results saw adjusted operating profit surge 15% to £945m and total cash generation at £1.7bn. Both were ahead of analysts’ respective expectations of £937m and £1.66bn.
Management said it remains on course to deliver another £500m of excess cash this year. And it added that the firm is on track to achieve its target of £1.1bn of adjusted operating profit this year.
Taken together, Standard Life is throwing off the kind of dependable financial firepower that underpins rising dividends, in my view. And management’s confident guidance only strengthens the case for it as a long‑term income powerhouse, I feel.
My investment view
Standard Life has its risks, like all firms, but its latest results show a business generating rising profits and surplus cash with real consistency. That strong financial momentum gives me confidence it can support dependable, growing dividends for many years to come.
With management guiding firmly towards higher operating profits and continued excess cash, I see it as a financially robust income compounder. And that combination makes it perfectly placed to anchor my retirement portfolio.
I may not choose to retire any time soon, but when I do, I expect this star holding to deliver serious dividend income and believe it is worth other investors’ research time.
I also have my eye on other high-yielding stocks that could strengthen my retirement portfolio further.
