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Dividend stock M&G (LSE: MNG) has quietly become one of the stars of my Self-Invested Personal Pension (SIPP). Best known for its sky-high trailing yield of 8%, the fourth-highest on the FTSE 100, it’s also treated me to some decent capital growth in a relatively short time.
The share price is up 23.5% over one year and 53% over five, which is impressive for what some might see as a stolid blue-chip.
I bought the shares in the summer and autumn of 2023. M&G pays dividends in May and October, and so far I’ve received four payouts. The most recent, 13.5p per share, landed on 9 May. Since I owned 3,393 shares at the time, that gave me £486, which I reinvested to buy another 208 shares. The next payment, due 17 October, is 6.7p per share, giving me around £241. Enough to buy roughly 93 more shares.
FTSE 100 income star
This shows how reinvesting dividends steadily builds a larger stake over time. My total return is now 54%. Of that, 37% is from growth, the rest from dividends. And that’s before this month’s payout.
M&G’s half-year results for 2025, published 3 September, showed why I’m happy to keep holding. Adjusted operating profit crept up just £3bn to £378m, while operating capital generation nudged up to £408m. Its shareholder solvency ratio climbed from 223% to 230%.
Profit numbers look volatile. Last year, M&G made a loss of £56m after tax in the first half of 2024, then swung to a £248m profit in the first half of the current year. That’s down to how accounting rules reflect market fluctuations, which can distort the underlying picture.
Modestly valued share price
M&G looks reasonable value. Its forward price-to-earnings ratio for 2025 is just 10.4, falling to 9.2 in 2026. The dividend yield is forecast to edge higher, reaching 8.1% next year and 8.4% in 2026. Dividends are never guaranteed of coursre, the board needs to maintain the cash flow to fund them. Future growth will be modest though, at just 2% a year.
No investment is risk-free. M&G’s biggest vulnerability is the market itself. A stock market crash or period of volatility could hit assets under management, cutting into revenue and profits.
Client redemptions are another danger. If investors panic and pull money, it reduces funds to manage and squeezes margins. If interest rates stay higher for longer, so will the risk-free yield on cash and bonds, which could hit demand for income-focused stocks like this one.
That said, dips can have a silver lining. Reinvested dividends buy more stock when prices fall, boosting my return when the share price hopefully recovers.
Playing the long game
There will be bumps along the road, but that’s part of investing. I’m not expecting the share price to climb every year. Given my plan to hold for decades, I can afford to look past short-term swings. I see M&G as a brilliant long-term wealth builder: steady, generous, and quietly rewarding. Investors might consider buying if they want an income-rich FTSE 100 share that with luck, could keep delivering for years to come.
