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I was looking at something higher FTSE 100 dividend stocks recently, and my attention fell again on Phoenix group holdings (LSE: PHNX) and its forecast return of 10.6%.
I calculated that if I invested £200 a month in Phoenix Group, after 20 years I could have enough to pay me an annual passive income of around £16,000.
However, that involves a lot of assumptions. As if the dividend will remain unchanged for the next two decades. Oh, and the stock price wouldn't change either.
There is no smooth ride
Anyone who has watched events in the financial sector over the past 10 years will probably rule out the possibility of either thing happening immediately.
Phoenix is in a notoriously cyclical business. And if earnings volatility hurt the dividend one year, I'm afraid the share price could take a hit.
Still, the forecasts look good and I think Phoenix could be a good addition to a long-term stocks and shares ISA. But I would like to have a little diversification to help me manage my risks.
Long term security
Looking at some of the other FTSE 100 dividend yields on offer now, I can't ignore them. Taylor Wimpey.
A dividend yield of 6.4% is offered. It would still be a good annual return if it could continue. In the short term, however, I think that probably prompts greater caution.
Builder buddy Barratt Developments has cut its dividend, given the pressure on the real estate sector. And Taylor Wimpey could do the same.
But the real appeal for me is the very long-term nature of the business. The housing shortage in the UK, plus the barriers to new businesses trying to enter, makes me think I see a source of income here.
Keeping security in mind again, I think I would add tesco to a long-term income portfolio if you started now. The dividend is modest at 3.8%, but I expect stable total returns.
Controversial
My last two suggestions here are perhaps a little controversial, for different reasons.
One is British American Tobacco, with a dividend yield of 9.9%. Maybe it's a little iffy from an ethical point of view. And many investors think the tobacco industry is doomed anyway.
But I think tobacco products could be with us for a long time. And from a purely financial point of view, I see another source of income here.
My fifth option is BT Group, with its huge debt, the biggest drawback I can see. Oh, and the share price decline of the last five years hasn't helped the total return, even if the dividend has been good.
Still, after publishing what could be a turnaround in fiscal year results, BT has raised its dividend again. If it can keep its returns above 6%, maybe I could just take the cash and not worry about anything else.
Total profitability
Speaking of total returns, the average stocks and Shares ISA has achieved 9.6% annually over the last decade.
This is ahead of the UK stock market performance over the very long term. But I think there could be enough cheap dividend stocks in the FTSE 100 to give us a good chance.
