UK shares are known for their high dividend yields. But the company I’m looking at today is an extreme high-yielder even by UK standards, at a lofty 10%+.

Such a high level can be a warning that a cut’s expected. But not all high yields spell disaster. They can sometimes be sustainable.

The company I’m looking at today is a member of the FTSE 100. It has a track record of being able to support its high payout. Are the shares worth considering as a possible buy?

A successful specialist

FTSE 100 life insurer Phoenix Group‘s (LSE: PHNX) not exactly a household name. That’s because most of its business involves buying up portfolios of life insurance policies from other insurers and running them to completion.

This process generates plenty of cash for Phoenix, but it’s ultimately a run-off business. New policies are always needed to replace those that mature.

To support its long-term growth, Phoenix has started selling new products directly to customers in recent years. This is mostly being done under the Standard Life brand.

Progress so far has been positive, in my view, but there’s no doubt this change of strategy carries some risk. It will require different skills and processes within the business. I see this as one of the main risks for potential investors.

A dividend stalwart?

Whatever the future holds, Phoenix has certainly delivered reliable dividends for long-term shareholders. My sums suggest patient shareholders have collected 600p in dividends since the company was listed on the London market in 2009.

Shareholders who bought the shares in November 2009 at around 550p have received all of their original investment back in dividends, plus a little extra.

Admittedly, the shares haven’t performed that well. Many shareholders are underwater, especially as the stock’s fallen as interest rates have risen.

I think it’s fair to say that for many shareholders, returns have been through dividends alone.

Of course, there’s not necessarily anything wrong with this. After all, dividends provide upfront cash that can’t be taken back.

But share prices can always rise and fall without warning. You can’t lock in a profit without selling.

Why consider Phoenix now?

Dividends are never certain and can always be cut. But Phoenix has generated the cash needed to support its dividend for many years. Management provides regular guidance on cash targets and have said it’s committed to ongoing dividend growth.

I think the dividend should remain safe, as long as the business can deliver some underlying growth. I also think that Phoenix shares could be unusually cheap at the moment.

Broker forecasts suggest the payout will rise by 2.5% to 53.9p per share in 2024. That gives a potential 10.7% dividend yield. This is well above the historic average for this share.

If interest rates fall as expected, I think the Phoenix share price could rise as investors become happy to accept lower dividend yields.

For me, Phoenix looks attractive right now. If I didn’t already own shares in another high-yielding insurer, I’d definitely consider buying for my dividend portfolio at current levels.