FTSE 100 dividend heavyweight Standard Life (LSE: SDLF) continues to see its profits climbing and shareholder returns rising.
Analysts expect more of the same in the coming years, giving the stock one of the most attractive income profiles in the leading index.
So, how much second income am I looking at from my current stake in the firm?
How does the growth momentum look now?
The foundation of dividend rises in any stock remains the underlying business’s fundamentals, particularly its earnings trajectory.
There are risks here for any firm, of course, with one for Standard being a sharper downturn in financial markets. That could reduce fee income and slow projected earnings rises. Another is a regulatory tightening in capital requirements, which could squeeze its margins.
That said, analysts forecast that Standard’s earnings will rise by a whopping annual average of 47.8% over the medium term at minimum.
Its full-year 2025 results released on 16 March this year showed IFRS adjusted operating profit jumping 15% year on year to £945m. Meanwhile, operating cash generation increased 5% to £1.474bn.
Management added that the firm — already the UK’s largest long-term savings and retirement company — 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 this year.
All this supports the company’s progressive dividend policy. It aims to lift the dividend in line with earnings per share growth. But if earnings slip in a particular year, the payout is kept at the existing level, not reduced.
So how much in dividend income?
Standard’s current dividend yield is 6.7% — more than double the FTSE 100’s present average of 3.1%. These returns can go up and down, of course, over time, as share prices and annual payouts change.
However, analysts forecast the firm’s dividend yield will rise to 7.1% this year, 7.3% next year, and 7.7% in 2028.
So, my £20,000 holding in the stock would make £23,089 in dividends after 10 years and £180,007 after 30 years. That marks the end of a standard investment cycle for long-term investors. It starts with first investments around 20 and finishes with early retirement options around 50.
The figures are based on the forecast of 7.7% as an average and on the dividends being reinvested in the shares. The process is called ‘dividend compounding’ and it effectively turbocharges these returns over time.
By the end of 30 years, the holding’s total value (including the £20,000 original stake) would be £200,007.
And that would deliver a yearly income of £15,401 by that point!
My investment view
For me, the combination of rising earnings, strong cash generation and progressive dividend policy makes Standard Life a compelling long‑term income anchor. The business is throwing off more excess cash each year, and management has shown a consistent commitment to returning that to shareholders.
The forecast yield climbing towards 7.7% only strengthens the case for building a larger second‑income stream over time. And with the company’s growth momentum still firmly intact, those payouts look well supported for the foreseeable future.
That is why I am continuing to add to my holding. And it is also why I think the stock deserves serious consideration from any investor focused on long‑term, reliable income.
Should you invest £5,000 in Standard Life right now?
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Simon Watkins owns shares in Standard Life.
