Down 12% per month and yielding 10.7%! Is this the best stock for November income?

October was very difficult for my portfolio, including one of my favorites FTSE 100 total income: Phoenix Group Holdings share price (LSE: PHNX). It decreased by 12.12% in the month. Although I was surprised to see it increased by 8.24% in a year.

I bought Phoenix for the express reason that it pays one of the most impressive yields in the blue-chip index.

I invested three times in 2024: £1,200 on 30 January, £1,500 on 4 March and £500 on 7 July. Those are small amounts, strange to me but I’ve been collecting cash sitting in my portfolio to make sure I’m fully invested.

Can the share price take off from here?

The main attraction was its high yield, which was over 9% at the time. I checked its accounts and it looks to me like its profits have staying power, management has been increasing them for eight out of the last 10 years. Let’s see what the chart says.

Chart with TradingView

I knew I was taking a risk. If revenue declines, or cash flow is reduced, a dividend cut would make it an obvious target for the board.

Phoenix’s stock price looked very good value at the time. This combination of sky-high yields and low valuations was one shared by a number of FTSE funds, particularly insurance. Aviva and treasurer IM&G.

All three have not been successful, as volatile stock markets deter investors, drive customer outflows and reduce the amount of assets under management.

Higher interest rates have also reduced the attractiveness of equity stocks, as investors can get good yields from cash and bonds without the risk of capital that comes with stocks… even green chips like these three.

That didn’t bother me too much. I thought that interest rates would go down at some point, and when they did, the Phoenix would have to be repeated.

I plan to hold Phoenix for years while reinvesting all profits. Assuming today’s yields hold broadly (there’s no guarantee of that) I’ll double my money in less than eight years, even if stocks don’t rise at all.

I can’t resist this great deal

But what if they fall? In fact, they just found out, after a difficult month for the FTSE amid the fall budget tensions and the upcoming US presidential election on 5 November.

Hopes of an interest rate cut have faded again, as the US economy is on the upswing. This drove up bond and savings rates, which hit Phoenix. My Phoenix shares are down 4.17% since I bought them, however my original £3,200 is now worth £3,415.

That’s down to the two dividend payouts I’ve made along the way, which were £135.96 on 24 May and £168.42 on 31 October. After replanting them, I increased by 6.7%. That’s despite a double-digit decline last month.

Dividends are not guaranteed but I can keep them once they are paid. Phoenix shares now yield an impressive 10.72%. That’s big, and it looks even more risky. Economic uncertainty may affect income. Recent stock market volatility may reduce assets under management. The board may decide that it is paying too much.

But I still think this dip is a good opportunity to throw some money into Phoenix, and that’s what I’m going to do. I can’t stand that income.