Each time I tuck right into a sausage roll I get an irresistible urge to spend money on bakery chain Greggs (LSE: GRG) shares for some purpose. That’s an issue although. Whereas the sausage roll solely prices a few quid, I wouldn’t make investments lower than £1k in a inventory and I don’t have that proper now.

And once I do, I’ll in all probability purchase BP shares first, as a result of they’ve been on my purchasing checklist for yonks and look good worth because the oil price falls beneath $80 a barrel.

So the place do I increase the cash? How about insurance coverage conglomerate Phoenix Group Holdings (LSE: PHNX), which I maintain inside my self-invested private pension (SIPP)? Phoenix has the very best yield on your complete FTSE 100, (for those who ignore Vodafone Group, which cuts its dividend in half subsequent yr).

Swapping revenue for development

Phoenix has a meaty trailing yield right now of 10.69%. I did my research earlier than shopping for it in January, and determined there was a good probability it was sustainable. Fingers crossed! All dividends are mortal, and double-digit yielders have a very excessive demise price.

Phoenix paid me my first dividend of a number of hundred kilos in Could, which was good. I did what I all the time do with dividends, and reinvested it straight again into its inventory.

The disadvantage with Phoenix is that whereas it’s nice at paying dividends, it’s struggled to ship share price development. Its shares are down 11.79% over the past yr, and 27.87% over 5 years.

It did bounce in March after delivering a optimistic set of full-year outcomes, with revenues, earnings and new enterprise all climbing. It additionally generated £2bn money, beating its upgraded goal of £1.8bn and supporting the dividend.

But the Phoenix share price quickly sank again into the doldrums, and I’m questioning whether or not a greater use of my dividend can be to take a position it into an organization with increased development prospects. Step ahead Greggs.

FTSE 250 development inventory

The Greggs share price is up 7.33% over one yr and 32.85% over 5 years. By reinvesting my Phoenix dividends into its shares, I may doubtlessly generate each revenue and development over time. So ought to I do it?

Greggs is pink scorching proper now with complete 2023 gross sales leaping 19.6% to £1.8bn. Its replace on 14 Could served up one other 13.7% complete gross sales development for the primary 19 weeks of 2024. That’s regardless of “challenging conditions” because the cost-of-living disaster drags on.

The FTSE 250 group now boasts 2,500 shops, after opening one other 64, and is increasing into ice drinks together with espresso, flavoured lemonades and coolers.

There’s an issue although. Greggs shares look absolutely priced after their sturdy run, buying and selling at 23.42 instances earnings. That compares 15.6 instances earnings for Phoenix. I feel I’ve left it too late.

Greggs’ yield is inevitably a lot decrease at 2.11%. Phoenix pays 5 instances as a lot revenue, and its shares are cheaper at 15.6 instances earnings. Sorry Greggs. I feel I’ll persist with my unique plan and reinvest my dividends again into Phoenix. If the dividend holds I’ll double my cash in simply over seven years, with any share price development on high.