Legal & General’s share price recently fell 6%, pushing the dividend yield to 9%. Time to consider buying?
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Yesterday (March 11), Legal & General‘s (LSE: LGEN) share price is down just over 6%. It ended the day at 242p, about 14% below the 2026 high.
Is there an opportunity here with a lower share price and dividend yield? Let’s talk.
It releases its results for 2025
The driver of the share price fall yesterday was the results of the full year 2025 policy. This wasn’t bad, however, there were a few weak spots.
Another problem was that the main operating profit came at slightly lower rates. It reached £1.62bn, up 6% year-on-year, but below the consensus forecast of £1.65bn.
Another issue was that the full-year Solvency II ratio came in at 210%, compared to 219% expected and 232% a year ago. This ratio is a financial health check of the insurance company and therefore it is not good for it to decrease (it seems that the company is now looking at a ratio of 160%–190% in the medium term).
paid a dividend of 21.79 %. The increase is good for investors, however the problem here is that the basic earnings per share (EPS) for 2025 was only 20.93p.
In other words, earnings no longer include dividend payments. This suggests that the dividend payment may not be permanent.
It is worth noting that the company announced a £1.2bn share buyback in the results. This may help increase earnings per share in the future.
An investment opportunity?
As for whether the shares are worth considering at current levels, I think it might be if the investor is looking for income.
At today’s share price, they look cheap. Taking the earnings figure above, we have a trailing price-to-earnings (P/E) ratio of 11.6.
As for the dividend yield, it is now around 9% sequentially. That is undoubtedly attractive.
Meanwhile, taking a long-term view, the company seems well-positioned for continued growth. With growing demand for long-term investments and retirement income, we are well positioned.
But there are a few risks you should be aware of with this stock. First, there is the risk of budget cuts at some point.
Since earnings don’t include pay, I won’t have much profit by staying high. Note that the dividend reduction may affect the share price.
Stock market declines are another risk to consider. Given that the company generates most of its income from assets under management, a sharp drop in the stock market can put its profits at risk.
There is also some risk on the private equity markets side (Legal & General has been increasing its exposure here in recent years). Recently, there have been signs of stress in the private debt space and we cannot rule out other issues here such as loan defaults or large investor bailouts.
Given the risk, balancing positions will be important here. This is not a stock I will be loading into my portfolio.
