Market appetite for FTSE 100 shares is igniting again as eagle-eyed investors try to nab a bargain.
Legal & General Group (LSE: LGEN) is one blue-chip share attracting a lot of love right now. Hargreaves Lansdown says it’s the most frequently purchased share across its investing platform. In the past seven days, the financial services firm accounted for 3.86% of all ‘buy’ orders.
I certainly think Legal & General shares are highly attractive as a way to boost my dividends. Here, I’ll explain why I’d buy them to boost my passive income.
8%+ dividend yields
Dividends at the business were rising steadily up to the pandemic. And having been frozen during the height of the crisis, shareholder rewards are back on the ascent.
Legal & General paid a total dividend of 18.45p per share in 2021. City analysts are expecting additional rises to around 19.4p this year, and 20.5p in 2023 too.
As a result, dividend yields sit at 8.3% for 2022 and 8.7% for next year. Both figures are more than double the FTSE 100 average of 4.1%.
Good protection
Of course, dividend projections can fall flat, meaning that big yields can prove worthless. But in my opinion, Legal & General’s in great shape to meet broker forecasts.
Dividend coverage at the business sits at about 1.8 times for the next two years. This is just shy of the desired benchmark of 2 times and above.
Legal & General’s remarkable cash creation and strong balance sheet will also give it added firepower to meet these forecasts.
It remains on course for cash generation of £1.8bn in 2022, it confirmed this week. Furthermore, its Solvency II ratio improved to between 235% and 240% as of September. This was up from 212% three months earlier.
The best FTSE 100 income stock?
I can’t give a definitive answer as to whether Legal & General is the best FTSE 100 dividend stock out there. Its cyclical operations mean it might not be as appealing for risk-averse investors.
Defensive stocks like utilities provider United Utilities or household goods manufacturer Unilever might be more attractive income-paying stocks to many.
And while dividend yields are huge, they’re not the biggest out there. Housebuilder Persimmon and miner Rio Tinto carry yields well above 10%.
However, it’s my opinion that Legal & General’s a top-class dividend share to buy. Predicted dividends for 2022 and 2023 boast large yields well above the FTSE 100 average. And the business has the cash on its balance sheet to meet payout forecasts too.
I think it should also deliver healthy passive income over the long term. Okay, the company faces extreme competitive pressures. But Legal & General’s brand strength and solid customer satisfaction scores give it an edge in the market. Two-thirds of its new customers in 2021 rated its service at 9/10.
The business also has terrific revenues opportunities as people increasingly plan for retirement and the general population ages. I expect trading across its pensions, life insurance and wealth management arms to rise strongly.