Imagine putting £100,000 into a share in a SIPP and then sitting back to watch the holding grow in value to £1.3 million.

I know £100,000 is a lot to invest – especially as I believe in keeping a SIPP diversified, so I wouldn’t invest £100,000 in a share unless I had a much bigger pool of money in my SIPP to invest.

Still, turning £100k into £1.3m sounds great to me!

In this example, I guess not even some share price increase. A rising stock price can speed things up, although the reverse is also true.

Taking the long-term approach

Speaking of speeding things up, I should mention that my strategy here is long-term.

I think that makes sense. In this example, I consider one time frame of 25 years.

In the context of a SIPP, I see it as a practical time frame. Many investors plan to hold their SIPP for several decades.

The power of composition

So, how could I hope to turn my £100,000 into £1.3m even over 25 years, if the price of the stock I’m buying doesn’t move an inch?

Simple: composition of the dividends.

Coupled with 10.8% compounded annually, my £100,000 investment would end up worth £1.3m after a quarter of a century.

The FTSE 100 share with a dividend yield of 10.8%.

However, that brings me to the question of a blue chip FTSE 100 the stock would offer anything close to a 10.8% return. After all, that is three times the average return on the FTSE 100 at the moment.

You almost do: Vodafone. But its 10.6% yield is set to collapse as the company has announced plans to cut its dividend in half. It’s a useful reminder that no dividend is guaranteed to last—and one high yield may be a sign that the city has doubts about whether it will do so.

Another FTSE 100 stock has a dividend yield of 10.8% and has announced no plans to cut its dividend. Quite the opposite, in fact: this year it confirmed its plan to continue raising payouts per share annually.

That company is Phoenix (LSE: PHNX), a financial services company that bills itself as the country’s largest long-term savings and pension business.

It has around 12 million customers and works with brands such as Standard Life and Sun Life.

Looking to the future

One of the challenges when analyzing financial services companies is that earnings are not always helpful. For example, fluctuating asset valuations can lead to higher or lower earnings numbers that don’t necessarily help assess the underlying financial health of a company.

On the plus side, Phoenix is ​​in a large, well-established business area and has a very large customer base and deep experience in a specialist area. These attributes could help the business, which had sales of £4.9bn last year, generate enough free cash flow to maintain its generous dividend.

It may not happen; one risk I see is a downturn in the real estate market hurting the valuation of Phoenix’s mortgage book, forcing it to write down valuations.

But overall, I think Phoenix is ​​a stock that investors with an eye on long-term passive income streams should consider.