Legal & General (LSE: LGEN) is one of the UK’s most popular dividend stocks and it’s easy to see why. Not only does the stock have a high yield but it also has a good track record in terms of dividend growth, having increased its payout significantly over the last decade. Here, I’m going to look at the Legal & General dividend forecast for 2022 and 2023. I’ll also discuss whether I’d be comfortable buying the stock for my portfolio today.
Legal & General pays big dividends
Before I provide the dividend forecasts, it’s worth looking at Legal & General’s dividend payouts in recent years. This will help put the projected payouts for the years ahead in context. You’ll find the payouts for the last five years below.
| Year | Dividend (per share) |
| 2017 | 15.35p |
| 2018 | 16.42p |
| 2019 | 17.57p |
| 2020 | 17.57p |
| 2021 | 18.45p |
Dividend forecast for 2022 and 2023
As for the estimated payouts for this year and next, Legal & General is currently expected to pay out 19.4p per share for 2022 and 20.3p per share for 2023, according to data from Refinitiv. At the current share price of 284p, these payouts equate to yields of 6.8% and 7.2%. That’s not bad at all in the current low-interest-rate environment in which savings accounts are only paying interest of a few percent.
It’s worth stressing, however, that these are just estimates from City analysts. So, there’s no guarantee that the company will pay such dividends. Companies can cut, cancel, or suspend their payouts at any time.
Would I buy Legal & General shares today?
So, is Legal & General a stock I’d be comfortable buying myself today? It is. In fact, this is one my top picks out of all of the high-yielding dividend stocks on the London Stock Exchange.
The main reason I’m bullish here is that, unlike many other high yielders, Legal & General has relatively attractive long-term growth prospects. Not only is there growth potential in the company’s retirement business (the group helps organisations de-risk their pensions schemes) but there’s also growth potential on the investment management side of the operation.
Meanwhile, the stock’s valuation is quite low. With analysts expecting the group to generate earnings per share (EPS) of 33.7p for 2022, the forward-looking price-to-earnings (P/E) ratio here is just eight – well below the median FTSE 100 P/E ratio. It’s also worth pointing out here that the EPS forecast gives a dividend coverage ratio (earnings per share divided by dividends per share) of about 1.7, which suggests that the dividend is secure.
Of course, the stock is not without risk. One issue to be aware of with Legal & General is that, like other financial stocks, it can be quite volatile at times. For example, earlier this year, its share price fell from around 280p to around 235p when markets were turbulent. So, a long-term approach is required.
All things considered, however, I believe the stock’s risk/reward profile is attractive.