Today I am looking at whether Legal & General (LSE: LGEN)is an appealing pick for those seeking chunky dividend income.
Double-digit dividend growth tipped again
Despite Legal & General experiencing extreme earnings turbulence over the past five years, the company’s bubbly long-term earnings outlook has prompted the business to lift the annual dividend at a compound annual growth rate in excess of 20% during the period. And the company kept this trend going with a 22% lift, to 9.3p per share, in 2013.
City brokers share the firm’s positive growth forecasts, and expect earnings to rattle 9% and 8% higher during 2014 and 2015 
correspondingly. In line with these increases Legal & General is anticipated to lift the full-year dividend a further 14.1% during 2014, to 10.6p, with an additional 12.8% advance chalked in for 2015 to 12p.
These proposed payments create inflation-smashing yields of 5% and 5.7% correspondingly, beating the FTSE 100 forward average of 3.2% as well as a respective reading of 4.8% for the complete life insurance sector.
Huge cash generation drives dividend expansion
By conventional metrics Legal & General’s dividend picture for the next couple of years is far from secure, however, with dividend coverage falling below the security benchmark of 2 times prospective earnings or higher. Instead the insurance giant sports figures of 1.6 times and 1.5 times for 2014 and 2015 respectively.
However, investors should take heart from the company’s ability to churn out vast amounts of cash. Indeed, Legal & General says that a “disciplined investment in growth, effective management and rigorous cost control has enabled us to more than triple net cash since the financial crisis.” Such measures has pushed net cash to £320m in 2008 to more than £1bn last year, and which was up 16% from 2012 levels.
The insurance play has vowed to “increase the proportion of net cash we return to our shareholders as dividends while maintaining a strong but efficient balance sheet,” as well as deploying capital to boost its already-fizzy investment drive.
With the levels of new business at home and abroad continuing to surge, and its rampant capital expenditure drive across the globe ready to underpin long-term growth, I believe that Legal & General is a terrific selection for dividend investors.