Standard Life (LSE: SDLF) is a FTSE 100 name whose shares seem purpose-built for generating huge passive income over time.
It is the kind of business whose model naturally converts long‑term customer commitments into reliable shareholder returns via dividends. And, with the right starting sum and returns reinvested, that income can grow into massive monthly payouts in retirement.
So what sort of figures are we looking at?
Are dividends forecast to keep rising?
Standard Life — under its previous incarnation of Phoenix Group Holdings — has long been a leader in FTSE dividends. Part of its core guiding principles is its progressive dividend policy. This involves management increasing the dividend alongside earnings per share, but not cutting it if earnings fall.
Over recent years, the UK’s largest long-term savings and retirement company raised its dividend from 47.5p in 2020 to 55.4p in 2025. These generated respective average annual dividend yields of 6.8%, 7.5%, 8.3%, 9.8%, 10.6%, and 6%.
The varying return rates, despite rising dividends, underline that these payouts can alter with share prices.
Nevertheless, analysts forecast the dividends — and yields — will keep rising. Specifically, the projections are for dividend yields of 7.7% this year, 8% next year, and 8.3% in 2028.
By contrast, the average FTSE 100 dividend yield is just 3.1%.
What does this mean for annual income?
A £20,000 holding (the same as I have) in Standard Life would make £25,736 in dividends after 10 years and £219,167 after 30 years.
The numbers assume the forecast 8.3% as an average and the dividends being reinvested into the stock. This harnesses the extraordinary turbocharging effect of ‘dividend compounding’.
After 30 years on this basis, the holding’s total value would be £239,167 (including the initial £20,000).
And that would pay a monthly income of £1,654!
How strong does the business look?
As Standard Life’s rising dividends are directly linked to rising earnings, the outlook for these is crucial. A risk is tougher market conditions that could reduce fees on the assets it manages. Another is any regulatory change in the insurance sector that could squeeze its margins.
However, analysts forecast its earnings will soar by an average of 47.6% a year over the medium term.
Its full-year 2025 results showed IFRS adjusted operating profit rose 15% year on year to £945m. This reflected stronger contributions from both the Pensions & Savings and Retirement Solutions divisions. Meanwhile, contractual service margin grew 17% to £3.81bn, highlighting the huge store of future value that should continue driving earnings growth.
Management added that the firm should deliver another £500m of excess cash this year. And it reiterated it is on target to hit an adjusted operating profit of £1.1bn.
My investment view
With a long record of dependable dividends and a business model built on recurring cash flows, Standard Life looks well placed to keep rewarding long-term investors.
The latest results show a company generating strong profits and building a sizeable store of future value.
For those focused on long‑term income, that combination remains hard to ignore. And I will certainly be adding to my holding in the firm, as well as looking at similar opportunities in other sectors that have caught my eye recently.
