I think the Legal & General share price is a top FTSE 100 stock

I think the Legal & General (LSE: LGEN) share price is all too often overlooked by investors. The life insurance company is hardly the most exciting business, although it is one of the oldest corporations in the FTSE 100. Against high-flying tech stocks, the company looks like a throwback to a different time. 

But I think it would be silly to disregard this enterprise simply because it is not as exciting as its peers. Life insurance and pension management is a vast and growing business. As well as these business lines, the company is also one of the largest asset managers in Europe, a significant private equity investor, and has a growing homebuilding division in the UK. 

Legal & General share price opportunity 

Managing pension assets is not a business many firms can (or want to) get into. It is a highly regulated industry, which requires a lot of capital and oversight from regulators. 

On top of these challenges, companies have to gain consumers’ trust. I do not want to entrust my pension savings to a business with no track record. Legal has been a pension manager for ell over 100 years.

While past performance should never be used to guide future potential, this track record certainly gives me confidence that the company knows what it is doing. 

Moreover, the corporation manages more than £1trn of assets for clients across the world. And this asset base is growing every day. It provides a solid backstop to support the group’s operations. The funding also gives me confidence that the corporation has the financial resources to manage any situation that presents itself.

This significant asset base also provides economies of scale, further reinforcing the company’s competitive advantage and position in the UK pension market. These are the primary reasons I think the company is a great business.

Valuation opportunity 

The Legal & General share price also currently looks attractive from a valuation perspective. Indeed, the stock is trading at a forward price-to-earnings (P/E) multiple of 8.8. Further, it offers a prospective dividend yield of 6.4%. This is one of the highest dividend yields in the FTSE 100. 

Unfortunately, the payout is by no means guaranteed. As the firm manages the life savings of tens of thousands of consumers, regulators keep a close eye on its dividend. 

If they think the firm could be at risk of financial stress, regulators will almost certainly force it to cut the payout. Policymakers could also introduce additional rules and regulations, which may increase group costs and impact the company’s profitability. 

Despite these potential challenges, I would be happy to buy the stock for my portfolio today. Considering its competitive advantages and current valuation, I think the Legal & General share price looks incredibly attractive at current levels.