As for dividends, the insurer Phoenix group (LSE: PHNX) is one of the large beasts in FTSE 100. His gigantic dividend 9.9% makes it one of the most lucrative shares of FTSE 100 dividends. When it comes to traffic prices, Phoenix is ​​more disappointing.

For example, in the last five years it has increased only by 3% – but during this period the FTSE 100 index increased by 55%.

Five years ago, the market was still in the process of pandemic confusion, which can be a factor in Luce. But even in one year the price of Phoenix shares achieved worse results in relation to the index. Phoenix has dropped by 1% in the last 12 months, while the FTSE 100 has increased by 5%.

What is happening – and maybe it still makes sense that the investor should consider Phoenix, despite his disappointing the results of the share price?

A high dividend can be attractive, but also terrifying

Perhaps contradictory, I think that part of the challenge for Phoenix may actually be its dividend.

It may sound strange, but when the company has high efficiency, sometimes it can make investors be afraid of how likely it is to maintain the payment.

M & G,

Despite this, it increased by 74% in five years. Again, however, I think that this can simply reflect the base line from the time of Pandemia. Entering a little further, to the M&G list in 2019, the previous results were a 15% decrease in stock price despite consistently high dividend efficiency.

In the case of Phoenix, I think that the combination of a company seemingly monotonous (as it can do), because hard to understand circumscribed the enthusiasm of investors for shares.

Phoenix can be a high -performance opportunity

Despite this, while some shares do not excite investors, the money tends to speak. If Phoenix has powerful potential as a business, why did its price achieve poorly in time, even when the company still transfers generous dividends?

There is a risk that could explain. Long -term assumptions regarding valuation regarding the types of ground policies in Phoenix books can be questioned, for example, unforeseen economy movements. So a company that seems profitable for many years can suddenly start earning much less than expected as the economy has changed.

But although profits are the concept of accounting, cash flows show hard, chilly cash that the company generates.

Last year, the generation of Phoenix operating capital was £ 1.4 billion. He reached this level two years before the schedule. He is now expecting that generating operating capital will grow every year with a diameter up to an amount in terms of percentage.

If this achieves, the dividend looks comfortable to me. The progressive Phoenix dividend strategy provides for a annual dividend augment in action, although a dividend is never guaranteed.

In the case of this level of operational capital, market capitalization of £ 5.4 billion looks low to me.

In the middle-service period I would expect that solid business results can justify a higher price of shares for Phoenix. In addition, I think that high profits make investors take part.