I’ll admit it, I’ve been a little bit disappointed in my Legal & General (LSE: LGEM) shares. While the 7.5% dividend yield is to die for, the share price itself has been a disappointment. Yet today I’m feeling a little more chipper. So what’s changed?
Three years ago, I went on a FTSE 100 high-yield dividend stock buying spree. I felt that lots of dividend-paying UK blue-chips looked unmissable value. Many were trading on price-to-earnings (P/E) ratios of as low as six or seven, while yielding anything between 5% and 10%. Yet investors seemed wary. The shares lagged. I felt like I was taking a chance, but dived in anyway.
What do these FTSE 100 stocks offer?
I went big on FTSE 100 financials, where the best value and most promising dividends seemed to lie. As well as Legal & General, I bought Lloyds Banking Group, wealth manager M&G and insurer Standard Life (then called Phoenix Group). The last three have flown, handing me bags of share price growth and dividend income.
My total return on Lloyds in three years is around 175%. M&G has delivered around 105%, and Standard Life almost 90%. When I compare that to my likely return from cash (around 12%), I shudder. My retirement would have been much poorer if I’d left my money in a savings account.
Dig up these companies’ share price performance figures and you might think I’ve got my numbers wrong. The shares haven’t risen as high as my total return:
Stock | 1-year stock growth | 3-year stock growth |
| Lloyds | 51.6% | 161.2% |
| M&G | 33.7% | 76.7% |
| Standard Life | 32.2% | 59.7% |
My figures include reinvested dividends. And with M&G and Standard Life both yielding almost 10% when I bought them, they’ve really jacked up the total return. I plan to hold these stocks for 10, 20 or 30 years. There will be plenty of bumps along the way, but hopefully my wealth will continue to compound and grow nicely.
Why is this income king struggling?
So what about Legal & General? It shares are up just 16.5% and 27.4% over one and three years. While the board is working hard to streamline the business and find new sources of income, pre-tax profits have been sluggish:
- 2025 – £1.62bn
- 2024 – £1.62bn
- 2023 – £1.67bn
- 2022 – £2.52bn
- 2021 – £2.27bn
The big 2023 drop was partly down to higher interest rates reducing the valuation of physical property and alternative assets held by the group, which hit fee income. With interest rate rates potentially rising again, this remains a threat.
Today, Legal & General offers the biggest trailing yield on the entire FTSE 100 at 7.7%. I was pleased to discover that my reinvested dividends have lifted my total three-year return to 55%. Which is pretty good. It’s just that the others are a lot better.
I’m hoping the shares will play catch-up, but as ever, there are no guarantees. Markets remain bumpy, and if the AI bubble bursts, Legal & General could give up its modest gains. But I still think it’s worth considering for long-term investors seeking income. With luck, we’ll get a spot of growth too.
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Harvey Jones owns shares in Legal & General Group, Lloyds Banking Group, M&G and Standard Life.
