For investors looking for passive income, Feniks Group (LSE: PHNX) remains the leader FTSE100 I think it’s a chance.

The company is the UK’s largest life insurance and pensions consolidator. This type of business is based on scale and cost discipline and generates predictable, long-term cash flows.

The company consistently maintains one of the highest dividend yields in the leading index. Management is clearly targeting sustainable, growing dividends.

So what kind of income are we talking about over time?

Dividend rate forecasts rising

Phoenix paid a total of 54p in dividends in 2024, which currently yields 7.2% on the share price of £7.45. This is more than double the current FTSE 100 average of 3.1%.

Nevertheless, analysts forecast that the dividend will boost to 54.7 pw this year, 57.2 pw next year, 59 pw in 2027 and 60.8 pw in 2028. This means that the yields will be 7.3%, 7.7%, 7.9% and 8.2%, respectively.

This continues a clear upward trend over the past five years, in line with management’s progressive dividend policy. In this case, the dividend is expected to grow with earnings per share, but will not be cut if earnings fall.

In particular, they increased from 47.5 pence in 2020 to 54 pence in 2024, while the interim dividend for 2025 was 27.35 pence compared to 26.65 pence last year.

How much passive income can you get?

I have £20,000 worth of shares in Phoenix and the same amount can now buy 2,685 shares.

With this holding, investors would earn £21,000 in dividends after 10 years at a current yield of 7.2%. It ignores future projected increases, but also potential declines that may occur over time. This figure also takes into account the reinvestment of dividends into shares, which is called “dividend compounding.”

On the same basis, the dividend could potentially boost to £152,307 after 30 years. Taking into account the initial investment, by then the holding will be worth £172,307.

At this stage your annual passive income would be £12,406.

Solid business foundations?

The Phoenix model is based on cash flows from long-term life insurance and pensions, with a focus on closed-book life insurance. These are policies that are no longer sold to modern customers, but which continue to generate steady, long-term cash flows after the contract expires.

This capital supports the dividend and finances modern acquisitions, which then boost cash flow to the group.

The risk is a further reduction in household finances due to the boost in the cost of living. This could prompt customers to close their policies, reducing the cash flow on which Phoenix relies.

However, the latest results (H1 2025, published on September 8) showed a 25% year-on-year boost in adjusted operating profit to £451m. Cash generation from operations – which in itself can be a major growth driver – increased by 9%. The interim dividend has been increased by 3% to 27.35p.

Phoenix said it remains on track to achieve its 2024-2026 total cash generation target of £5.1 billion, of which £2.6 billion has already been delivered.

The aim is also to achieve a share capital coverage ratio in the range of 140-180%, which currently amounts to 175%.

My view on the investment

I believe Phoenix remains one of the most reliable revenue engines in the FTSE 100.

The dividend is supported by long-term cash flows and a mighty solvency position. Forecasts point to stable earnings and cash generation, which strengthens the case for growing dividends over time.

I will be expanding my holdings soon and I believe these shares are worth considering by other investors as well.