Investors looking for significant income from dividends might want to consider Legal & General Group. Currently listed on the FTSE 100, this company boasts an impressive yield of 8.1%. This rate significantly outperforms most savings accounts, which are yielding much lower returns.
Current Performance
Despite some fluctuations in earnings, Legal & General’s financial stability appears to be improving. The management has projected growth rates between 6% to 9% for the financial year ending 2025. The company also maintains a robust Solvency II ratio, which increased from 224% in 2023 to 232% in 2024.
The ratio has slightly decreased to 217%, reflecting recent dividend payments and a share buyback program. This decline is expected to be temporary as the company manages its cash flow to maintain dividends.
Investment Considerations
Although Legal & General shares have risen by 14% over the past year, this figure lags behind the average FTSE 100 growth of approximately 20%. In the last five years, the shares have decreased by 5%, which raises concerns about their momentum compared to rivals like Aviva.
Valuation Insights
- Current share price: 265p
- Historical trading level: close to 250p from almost a decade ago
- Price-to-earnings ratio: 15.5
While this pricing does not suggest that the shares are exceptionally cheap, it provides an entry opportunity for potential investors.
Future Outlook
The UK and global economies have faced challenges, including geopolitical tensions and tariff impacts. However, Legal & General is exploring new revenue streams, particularly in pension risk transfers. By taking over company pension schemes, the firm aims to drive growth amid a competitive landscape.
While investors should exercise caution, the high dividend yield makes Legal & General an appealing option for those seeking reliable income. Patience may be required as the company works toward long-term growth.
