M&G Dividend Yield Stays Above 6% as Net Flows Swing £9.7bn in One Year

M&G dividend yield remains comfortably above 6% heading into 2026, and the wealth manager’s full-year 2025 results, published in March 2026, show the business generating the kind of flow momentum that makes that income look more durable than it did when the shares first listed on the London Stock Exchange in 2019.

The total dividend per share for 2025 was 20.5 pence, up from 20.1p in 2024, with the second interim payment of 13.8p per share due on 30 April 2026. Management has guided for 2% annual dividend growth going forward. For investors buying at current prices, the forecast yield stands at 6.25%, a long way from the 10% that attracted early buyers, but still well ahead of what most large-cap income stocks offer.

Net Flow Reversal Is the Most Important Number in the 2025 Results

Net flows from open business swung to a £7.8 billion inflow in 2025, from an outflow of £1.9 billion in 2024. That is nearly a £10 billion swing in twelve months. The Asset Management segment drove most of the improvement, generating £7.0 billion of net inflows from external clients, equivalent to 4.4% of opening assets under management and administration. UK domestic net inflows were £0.3 billion in 2025, compared with net outflows of £4.7 billion a year earlier.

Total assets under management and administration (AUMA) rose to £375.9 billion at 31 December 2025, from £345.9 billion a year earlier. Non-UK third-party assets under management reached £107 billion at the same date, up from £89 billion at end-2024, which matters because international diversification reduces M&G’s dependence on a UK retail investor base that has been notoriously fickle about active funds.

On the IFRS basis, M&G reported a profit after tax of £314 million for 2025, reversing a loss of £347 million in 2024. The swing was driven by improved short-term fluctuations in investment returns and reduced mismatches arising on application of IFRS 17 accounting. Adjusted operating profit before tax, the figure management uses to frame the dividend and capital policy, came in at £838 million for 2025, essentially flat against £837 million in 2024.

M&G Dividend Yield Supported by Capital Generation, Though OCG Slipped

Operating Capital Generation (OCG) fell to £765 million in 2025 from £933 million in 2024, with the decline attributable to higher capital strain from new Life business (£163 million in 2025 versus £102 million in 2024). Before that new business strain, OCG of £928 million puts the company on track against its cumulative 2025-2027 target of £2.7 billion. The Solvency II ratio stood at 242%, which remains a comfortable buffer against the dividend obligation.

The Life segment contributed adjusted operating profit of £764 million (2024: £746 million), lifted by PruFund and Traditional With-Profits performance. Asset Management adjusted operating profit was £280 million (2024: £289 million), with recurring revenues rising to £1,066 million from £1,008 million but offset by lower performance fees and investment returns. The cost-to-income ratio in Asset Management moved from 76% to 75%, and the company hit its £250 million transformation cost-saving target by end-2025, ahead of schedule. M&G is targeting a group cost-to-income ratio of 70% by end-2027.

The adjusted operating profit track record over recent years shows both the recovery from the 2022 dip and the plateau at the top end of the range:

Management has set a target of at least 5% average annual AOP growth over 2025-2027, with a meaningful acceleration in AOP expected in 2026. The contractual service margin, a forward indicator of future Life profitability under IFRS 17, grew 10% to £6.6 billion at year-end 2025.

The Dai-ichi Life Partnership Adds a Credible Growth Lever

Dai-ichi Life HD is now M&G’s largest shareholder following a strategic partnership that is already generating results. The arrangement produced £0.4 billion of inflows within its first seven months and is expected to deliver at least $6 billion of new business over five years, with M&G acting as Dai-ichi Life HD’s preferred asset manager for Europe. That institutional anchor provides a flow source that is largely uncorrelated with UK retail sentiment, which has been one of M&G’s persistent structural vulnerabilities as an active manager competing against index-tracking funds.

In the bulk purchase annuity market, M&G completed 11 transactions in 2025, generating new business volumes of £1.5 billion, up 65% year-on-year. The company completed its first With-Profits bulk purchase annuity transaction in the first quarter of 2026. Performance credentials remain intact: 75% of mutual funds by AUMA ranked in the upper two performance quartiles over five years, and 76% of institutional funds outperformed their benchmarks on the same basis.

The valuation has re-rated considerably from the single-digit price-to-earnings multiple that made the original thesis straightforward. The trailing price-to-earnings ratio is now 26, though the forward multiple sits at 13.9, reflecting expectations of AOP growth into 2026. That is still a discount to many global asset managers. Some market observers have questioned whether the company should be deploying more capital into growth or launching a buyback rather than constraining itself to 2% annual dividend increases. It is a fair challenge, and the answer depends on how quickly the Dai-ichi Life pipeline and the bulk annuity business scale.

M&G was spun off from Prudential in 2019 and has now built a track record across two full market cycles. The forward P/E at 13.9 and the 6.25% yield together make it a different proposition from the deep-value income play it was three years ago, but the flow reversal and the Dai-ichi Life partnership represent a structural upgrade to the earnings cadence. The next test is whether the 2026 AOP acceleration management has guided for actually materialises in the interim results.