There comes a time in the life of every company when management and investors find themselves standing at a crossroads with a difficult choice to make. If you were a blues guitar player in the Mississippi delta in the 1930s, standing at the crossroads might mean selling your soul to the devil. Luckily for Phoenix Group (PHNX), the choice of direction is not quite as supernaturally charged. Instead, the company must decide whether to wave goodbye to its youth and embrace the income share status of early middle age. Doing so spells opportunity for investors needing dividends to finance their own troublesome middle years.
- Cash generation is exceeding expectations
- Big dividend yield
- New growth opportunities
- Highly leveraged
- Unlikely to regain premium valuation
By any measure, Phoenix’s 20-year progression from a bit player in the insurance consolidation market to a FTSE 100 stalwart and peer of Aviva (AV.) and Legal & General (LGEN) is worth a Harvard Business Review case study.