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Prudential

What it does: Prudential is a life insurance and asset management company operating solely in Asia and Africa.

By Andrew Mackie: Following the spin-off of its UK and US businesses, Prudential (LSE: PRU) is now focused entirely on some of the world’s fastest growing markets. This makes complete sense when one considers its growth drivers. Across Asia, for example, despite rising levels of prosperity, insurance penetration is still extremely low. This market is estimated to be worth $1.8trn.

What I particularly like about Prudential is that it is diversified across geography, channel and product. Not only does this provide it with multiple sources of growth but also adds resilience to its business performance. Its distribution network encompasses over 500,000 licensed agents as well as through partnerships with banks (known as bancassurance).

Prudential’s share price has come under severe pressure throughout 2022. It is down 30% year to date. This has been primarily driven by the ongoing closure of the border between Hong Kong and Mainland China. This has hit revenues in its largest market. However, when one considers the explosive growth potential across several of the regions it operates in, today’s depressed share price offers investors an attractive entry point.

Andrew Mackie owns shares in Prudential.

Games Workshop

What it does: Games Workshop designs, manufactures, and sells fantasy miniatures for its Warhammer tabletop gaming experience.

By Zaven Boyrazian. Games Workshop (LSE:GAW) is arguably one of the world’s most recognised tabletop gaming companies. This is the group behind the immensely popular Warhammer franchises, generating the bulk of its revenue through selling miniatures to hobbyists through its global network of retail partners.

Over the last 12 months, the share price hasn’t been the best performer, dropping by over 40%. It seems investors are growing increasingly pessimistic about the short-term performance of this consumer discretionary business. And the latest trading update did show some shrinkage in profits, as consumer spending takes a hit from the cost-of-living crisis.

However, this drag on earnings ultimately stems from a short-term problem. And with the group’s long-term strategy still intact, backed up by an impressive cash war chest of £71m, I can’t help but see the recent share-price drop as a buying opportunity for my portfolio.

Zaven Boyrazian does not own shares in Games Workshop.

Smurfit Kappa Group 

What it does: Smurfit Kappa manufactures packaging products for e-tailers, supermarkets, consumers and industrial customers. 

By Royston Wild. A slew of positive trading updates from the packaging sector would encourage me to buy Smurfit Kappa Group (LSE: SKG) shares for November. 

The FTSE 100 business released financials of its own on Wednesday, 2 November. I think this could help it to record further healthy share-price gains across the month, and beyond. 

Industry rival Mondi reported a 55% rise in underlying EBITDA in the third quarter, it reported in October. It commented that “higher average selling prices and overall volume growth more than offset significant cost pressures.” 

Shortly before this, DS Smith announced that it expected “very strong” revenues growth in the six months to October. Trading was so strong in fact that the firm lifted its half-year profits forecasts. 

Smurfit Kappa’s cheap share price certainly leaves scope for fresh gains if its own financials impress. The packaging powerhouse trades on a forward price-to-earnings (P/E) ratio of just 7 times. 

Royston Wild own shares in DS Smith. 

AstraZeneca

What it does: AstraZeneca is a biopharmaceutical company that develops medicines used by millions of patients worldwide.

By Charlie Carman. AstraZeneca (LSE: AZN) has been a top FTSE 100 performer for a decade. An anticipated return to pre-Covid levels of cancer diagnostics should boost sales for the healthcare heavyweight’s range of oncology products, including Tagrisso, Lynparza, and Imfinzi.

Indeed, AstraZeneca is well positioned for an ongoing transformation in global demographics. Demand for pharmaceuticals to treat chronic diseases continues to rise, and the World Health Organisation predicts one in six people will be aged over 60 by 2030.

Disappointingly, the business suffered a recent setback in a trial for a nasal spray version of its Covid-19 vaccine. Initial testing revealed it didn’t provide adequate protection in humans. However, there’s more to the company’s drugs portfolio than coronavirus treatments, and I think growth prospects look bright elsewhere.

AstraZeneca’s share price has fallen nearly 15% since reaching a 52-week high in August. I believe this presents an attractive buying opportunity to increase the position in my shares.

Charlie Carman owns shares in AstraZeneca. 

Persimmon

What it does: Persimmon builds houses. And when prices are right, it builds up its land bank to build even more houses on.

By Alan Oscroft. The long-term argument for investing in Persimmon (LSE: PSN) is, I think, straightforward. The UK is in the grip of a chronic housing shortage. And our listed housebuilders enjoy strong barriers to entry.

The short-term argument against buying now is the economy, and the growing fears of house price weakness. After all, the Persimmon share price has fallen 50% over the past 12 months, and we don’t want any of that, do we?

Well, actually, I remember the previous housebuilder slump, and I noticed Persimmon was buying up building land when it was cheap. And after that, the shares entered a long and strong bull run. So what’s happening now? Persimmon has been buying up land again.

But the bottom line for me is a P/E ratio of only about five, and a 19% forecast dividend yield. The short-term risks are real, but I think Persimmon is oversold.

Alan Oscroft owns Persimmon shares.

Renishaw

What it does: Renishaw designs and manufactures high-precision measuring equipment and healthcare technology.

By Stephen Wright. I’ve gone for FTSE 250 stock Renishaw (LSE:RSW) as my best British shares to buy in November. This is a business that’s growing, is well protected, and has a strong balance sheet.

Renishaw makes specialist equipment, which it sells to various end markets, including agriculture, healthcare, and power generation. The company has over 1,800 patents protecting its products. 

The company’s balance sheet also looks sound to me. Renishaw has £16.25m in total debt and £141m in cash, which means that I don’t think it’s in much danger with interest rates rising.

Earnings have been growing at an average of 6% annually over the last decade. But the stock has fallen by almost 30% since the start of the year and is now trading at a P/E ratio of 21. 

Stephen Wright does not own shares in Renishaw.

Taylor Wimpey

What it does: Taylor Wimpey is one of the UK’s largest housebuilders, selling homes to private customers and local housing associations

By Paul Summers. The share prices of UK housebuilders have come under serious pressure in 2022 over concerns that rapidly rising interest rates and a protracted recession will dampen demand. Taylor Wimpey (LSE: TW) has been one of the biggest casualties, losing half its value since the beginning of the year.

This may be an opportunity for long-term-focused Fools like me. The FTSE 100 firm is clearly in far better financial health than it was during the Great Financial Crisis. And while dividends can’t be guaranteed, the 10% yield also looks more secure than the payouts on offer from Taylor Wimpey’s rivals. 

CEO Jennie Daly’s comments on the company’s outlook will be closely scrutinised when it releases a trading update early in November. With a P/E of just five, however, I suspect a lot of fear is already priced in. 

Paul Summers has no position in Taylor Wimpey.

Legal & General

What it does: Legal & General is a British multinational company that provides insurance, savings and investment products.

By Nathan Marks. I’m looking to Legal & General (LSE:LGEN) for my top British shares to buy for November. As one of the UK’s largest pension funds, it’s been grappling with the recent chaos in the bond market.

The Bank of England took emergency intervention in early October. That was to mitigate a material risk to the financial stability of the types of services that Legal & General provides. However, the company said that this episode had a “limited economic impact” on its businesses and still expected a full-year operating profit of 8%.

Market volatility could still worsen, causing further uncertainty in the company’s balance sheet and liquidity. However, the stock looks great all-round value and I think it’s been oversold. Today it trades at a P/E ratio of 6.8 and yields a very attractive 8.2% dividend.

It’s hard for me to ignore this strong business with historically robust demand for its products and services.

Nathan Marks has no position in Legal & General.

International Airlines Group

What it does: International Airlines Group is an Anglo-Spanish multinational group that is host to renowned airlines such as British Airways, Iberia, Aer Lingus, Level, and Vueling.

By John Choong. Despite a potential recession on the cards, travel demand still remains robust. As such, I think International Airlines Group (LSE:IAG) shares look lucrative at their current price.

In its most recent trading update, the firm disclosed that demand for travel remains strong and is still recovering to 2019 levels. There also seems to be an uptick in business and upper-class travel, which was echoed by its American competitors. CEOs are of the opinion that consumers are still spending despite inflationary pressures, just less on goods but more on services. Therefore, IAG is expected to benefit as the holiday season approaches.

Nonetheless, it’s worth noting that IAG’s high debt-to-equity ratio (107%) isn’t ideal in a high interest rate environment, and is something investors should definitely take note of. The group will have to hope that its free cash flow continues to remain robust through an economic slowdown in the medium term, or risks damaging its bottom line and sending its share price back down.

John Choong has no position in IAG.

Howden Joinery

I had been thinking about buying into timber merchant Howden Joinery (LSE: HWDN) for a while.

The investment case is strong in my opinion. By developing relationships with trade customers, the company is able to attract repeat custom often with substantial sales volumes. The nature of the business and transportation costs means that Howden’s national network of local depots can help give it a cost advantage over farther flung suppliers. It has proven its business model can be very profitable.

Worries about a declining housing market have hit its shares hard, though. They have fallen 44% in value over the past year and now trade on a price-to-earnings ratio in single digits.

I recognise that a fall in house sales could hurt revenues and sales. But I expect renovations of existing properties to help support sales. In the long term, I reckon Howden’s robust business model could support a higher share price again.

JD Sports

I already owned shares in JD Sports (LSE: JD) before October.

Owning shares and watching them decline can cause investors to behave emotionally. JD’s decline of 55% over the past year is even worse than Howden’s.

That reflects concerns about management changes at the FTSE 100 retailer as well as the risk of inflation eating into profit margins. On top of that, if consumer discretionary spending falls, the market for sportswear could decline, hurting sales.

But as a long-term investor, I aim to behave rationally not emotionally. I take a similar view to JD as I do when it comes to Howden. I expect strong long-term demand in its market space. Within that space, it has an attractive position thanks to a large customer base, established brand, and proven business model.

Those assets could help support the business, which expects to deliver results this year in line with last year’s all-time record figures. I happily used the falling JD Sports share price as a buying opportunity for my portfolio.

Legal & General

A FTSE 100 share I had owned previously but no longer held coming into October was financial services provider Legal & General (LSE: LGEN).

But I saw a fall in the Legal & General share price as an opportunity to add the company back into my portfolio – and pounced on it. The shares are 20% lower than they were a year ago.

A worsening economy could hurt investment returns for the company. If that happens it may lead to sales and profits shrinking. But in the long term, I think the firm’s financial services expertise could help it attract and retain customers. It has a large customer base and very strong brand thanks to its multi-coloured umbrella logo.

Legal & General’s dividend yield of 7.9% is higher than many FTSE 100 peers. It should make the shares a useful addition to my passive income streams.

Regardless, things are only going one way. By the end of the year, the base rate is expected to be above 4%. By July 2023, it could be as high as 5.5%.

Does all this mean I should aim to hold a bigger proportion of my wealth in cash? Not a bit of it.

The benefits of cash

Now, don’t get me wrong — there are a couple of very valid reasons for tucking some of my money away in the bank.

One of these is the idea of having an emergency fund for life’s little (or not-so-little) emergencies. Whether it’s a broken boiler, a car repair, or a temporary period of unemployment, having cash to cushion the blow makes perfect sense.

Even if I don’t need to use this cash, there’s something very comforting about knowing the balance of my account won’t change between going to bed one night and waking up the next day.

Given this, I would certainly make a point of seeking out the best rate I could get. Staying in an account where the interest rate isn’t competitive doesn’t make sense to me, especially as transferring over to a new provider doesn’t take much effort.

The silent killer

Beyond having an emergency fund, however, I don’t hold cash. The main reason for this has been one of the main talking points in 2022.

Right now, any money in the bank is being (rapidly) eroded by inflation. Just in case you weren’t aware, the latter hit 10.1% in September. In other words, I could have my money in the best instant-access saving account on the market (currently 2.5%) and it would still be losing a lot of value.

This is why the vast majority of my wealth is in stocks, including a few that generate truly passive income in the form of dividends. It’s these that are looking particularly attractive at the moment.

Why shares are my priority

Right now, there are many blue-chip companies yielding far more than the interest rates on offer from savings accounts. Insurer Legal & General is forecast to yield 8.4%. Telecommunications titan Vodafone offers 7.9%. Many UK housebuilders have double-digit dividend yields!

What’s more, holding everything in a Stocks and Shares ISA ensures I won’t pay any tax on this income or any profit I make if the bits of companies I own are worth more when I eventually sell.

Please note that tax treatment depends on the individual circumstances of each individual and may be subject to future change. The content of this article is provided for information purposes only. It is not intended to be, neither does is constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

No sure thing

Naturally, there are some ‘costs’ I always need to keep in mind as I continue to buy. As has been evident in 2022, stock prices can be volatile. Those dividends can’t be guaranteed either, particularly if a company goes through a sticky-patch trading-wise.

And this is precisely why I adopt a long-term mentality when it comes to investing. I’d much rather endure these things now and benefit from the brilliance of compounding later down the line.

I’ll be watching next month’s decision with interest. But moving my money to the perceived ‘safety’ of a cash savings account isn’t on my ‘to-do’ list.

Here are two such dividend stocks I would consider buying for my retirement portfolio today, if I had spare money to invest.

Legal & General

The first is financial services firm Legal & General (LSE: LGEN), which I have recently added to my portfolio. I like the economic characteristics of the general insurance industry in which Legal & General operates.

Demand is likely to stay strong and claim payouts tend to be fairly predictable over time. That helps firms price their policies profitably. I think Legal & General has an advantage in the industry, thanks to its well-recognised brands. That enables it to attract customers.

The company does more than just insurance, with a wide range of investment products also offering a potential boost to its profit streams. There are risks in this business too. An economic slowdown could lead to less people investing, hurting profits.

But with the long-term perspective of investing for retirement, I remain upbeat about the outlook for L&G. With its annual dividend yield of 8.1%, the firm offers me substantial passive income streams.

Vodafone

Another of the dividend stocks I would consider adding to my retirement portfolio is telecoms giant Vodafone (LSE: VOD). The company now trades for pennies, meaning its yield has been pushed up to 7.7%.

That share price fall reflects some risks the company faces. Its large debt pile could act as an increasing drag on earnings as interest rates increase. The high capital expenditure requirements of its industry are also an ongoing risk to profitability at Vodafone.

But the company has a large installed base across a wide range of markets, especially Europe and Africa. It has a strong position in many markets and a well-established brand that can help it attract and retain customers. I expect demand for mobile telecom and data services to keep growing over time. I see Vodafone as well-placed to benefit financially from that.

I’d like to buy both

If I had spare cash to invest, I would happily buy both of these dividend stocks for my retirement portfolio today. They offer meaty dividends. But although dividends are never guaranteed, I am hopeful these strong businesses could help support the payouts over time.

Crucially, I also expect ongoing strong demand for the services of both firms. That could mean they keep ringing up sales and profits far into the future. Hopefully that could help support future dividends.

Dividend Aristocrats

Importantly, dividend payments are never guaranteed. They can be more or less than the amount distributed in previous years. Therefore, I’m searching for a company with strong business fundamentals that can weather economic storms. Dividend Aristocrats are a good place to start. These are usually companies that boast an economic moat or a comparative advantage. Additionally they typically have low debt and high profitability. Such characteristics allow them to consistently pay and increase dividend payouts to shareholders over many years.

One Dividend Aristocrat I’d buy today is Legal & General (LSE: LGEN). It’s a provider of insurance, savings and investment products. The demand for this tends to be robust in all stages of the economic cycle. Indeed, it has prospered within a competitive industry with a large customer base for decades.

It has been a tumultuous couple of weeks for Legal & General. Amid market volatility, the company felt the need to reassure investors. Specifically, it stated that it had not been a forced seller of bonds or UK government debt, known as gilts. Even so, the share price tumbled and at the time of writing, the stock is down 25% for the year. That’s good news for me though on my search for passive income. It now yields a very attractive and well covered 8.2% dividend.

What’s more, the stock trades at a forward price-to-earnings ratio of 6.3. It’s a quality business and it frankly looks like a good all-round value stock for my portfolio.

Passive income in 2023 and beyond

If I do buy Legal & General shares, let’s take a look at how it can earn me a target of, say, £500 in passive income next year. Each share will currently cost me 226.85p. Therefore, 2,695 shares would set me back just shy of £6,115. Assuming no cuts to its dividend, that lump sum should generate £500 in dividends in 2023. Tasty!

Unfortunately, I don’t currently have enough cash on hand to invest that lump sum today. However, I could still start building towards my savings goals. For example, I could invest £510 a month to save £6,115 in one year. Through regular monthly investments in strong, dividend-paying businesses like Legal & General, I can gradually build a portfolio that generates sustainable passive income. I tend to make investments at the beginning of each month and Legal & General is definitely on my to-buy list for November.

Legal & General Group

Legal & General Group (LSE: LGEN) has a great opportunity to benefit from Britain’s rapidly ageing population.

It must paddle hard given the ultra-competitive market in which it operates. But its expertise across fields such as pensions and wealth management could help it to thrive as retirement planning becomes more common.

Legal & General is a true industry giant. It generated pre-tax profit of £1.2bn in the first half of 2022. And, pleasingly for dividend investors, it generates huge amounts of cash with which to pay market-beating dividends.

For 2022, the company carries an 8.6% dividend yield. It also trades on a forward price-to-earnings (P/E) ratio of 6.5 times, making it a great all-round value stock to buy.

Ibstock

Brickmaker Ibstock (LSE: IBST) is a dividend share I already own. And following recent trading details I’m tempted to buy more.

On Tuesday, it said that “robust demand patterns” for its products persisted during the third quarter. As a consequence, trading for the period came in above its expectations.

Higher interest rates pose a threat to the business. Demand for its brick and concrete products could be hit if the housing market suffers a shock. This in turn could damage the passive income I receive.

But from a long-term view, I think Ibstock’s market outlook remains rock solid. And this is why I’d buy more of its shares today. Britain’s colossal housing shortage means home construction rates should rise sharply in the years ahead.

On top of this, brick sales will likely be supported by a strong repair, maintenance and improvement (RMI) market. Renovation activity should remain strong due to the high average age of the UK’s housing stock.

Today, Ibstock carries a decent 6% dividend yield. It also trades on a forward P/E ratio of 8.2 times.

Bank of Georgia Group

Demand for financial products is soaring in certain Eurasian markets. This makes Bank of Georgia Group (LSE: BGEO) another FTSE 250 stock I’d buy for long-term income.

Far-flung Georgia hasn’t been an attractive destination for banking stock investors historically. However, steady reform of the country’s financial industry make it a much more attractive place to invest today.

Meanwhile, the likes of Bank of Georgia continue to enjoy surging revenues as the domestic economy rapidly grows. Pre-tax profit here jumped 39% year on year during the six months to June.

Economic growth in Georgia could suffer in the event of a long Ukraine-Russia war. But this is a risk I think is more than reflected in Bank of Georgia’s rock-bottom valuation.

The firm trades on a forward P/E ratio of 3.5 times right now. Meanwhile, its 2022 dividend yield sits at an enormous 7.6%.

Legal & General shares have fallen more than 20% in 2022, dropping close to levels we last saw during the pandemic.

The fall has had one desirable effect for those seeking passive income. It’s boosted the forecast dividend yield as high as 8.2%.

Cyclical volatility

The insurance sector tends to be cyclical. Along with banking, it often suffers disproportionately during an economic downturn. And that means dividends can be erratic.

So, for me, investing for the long term to cover such short-term volatility would be especially important if I went for Legal & General. Or any insurance shares, for that matter — I own Aviva shares, and the same arguments hold for the two companies.

Saying that, Legal & General is one of the few high-yielding FTSE 100 stocks that hasn’t cut its dividends in the last decade. But I’d still be cautious and allow for that to happen. For the aim of building a passive income pot, it’s the long-term average return that matters.

How many shares?

Now, 6,500 shares might sound like a lot. But they’re priced at 226p, at the time of writing. So that amounts to a total investment of £14,690. Should the dividend yield remain constant at the currently forecast 8.2%, that much invested in Legal & General shares would get me a shade over my targeted £100 per month.

Suppose I don’t have £15k spare to invest right now (which, as it happens, I don’t). How could I get there? Well, I’m still in my net investment phase, and I don’t want to take any passive income right now.

If I instead invest £100 per month in the stock at an 8.2% dividend yield, I’d have approximately £15,700 in just nine years. I could then retire and enjoy my extra £100 per month in passive income just from my 6,500 Legal & General shares.

If I double my monthly investments, I could get my pot up to the required amount in just five years. And that £100 per month is just from one single stock. If I can build a portfolio of 10 similar stocks, that could get me a cool £1,000 per month.

Illustration

Of course, to get these specific results, the Legal & General share price would need to remain unchanged over my investing period. And the dividend yield would have to be static at 8.2%. I think I can reasonably predict that that’s not going to happen.

I also haven’t investigated the risks of investing in this specific company. Any investor would need to satisfy themselves that it fits into their own comfort zone. And it’s very possible that it might take a bit longer to reach my desired passive income level than I’m suggesting here.

But this is just an illustration, meant to show what’s possible for long-term investors aiming to build a passive income stream from dividend shares.

With the economy in bad shape and inflation raging, I would not be surprised if we see continued turbulence in the index. But turbulence can be a long-term investor’s friend. That is because it sometimes makes it cheaper to buy into companies with promising future prospects.

Here are three such FTSE 100 shares I would snap up for my portfolio today if I had spare funds to invest.

JD Sports

The sportswear retailer JD Sports (LSE: JD) is well-known thanks to its branches across the country – and indeed around the world.

But the most athletic thing about the JD Sports share price in the past year has been its downward movement. It has more than halved in the past 12 months.

Is that because of disappointing business performance?

I do not think so. The FTSE 100 company expects its headline profit before tax and exceptional items this year to be in line with last year, which was a record. Admittedly simply more of the same might seem like a letdown after years of growth. But this is in an environment where the firm faces risks from rampant inflation hurting profit margins and slowing consumer spending eating into sales.

The firm benefits from a proven business model, large customer base, and high brand awareness among its target audience. I think that gives it a long-term competitive advantage and I have been buying the beaten-up shares for my portfolio this year.

Legal & General

Financial services firm Legal & General (LSE: LGEN) has also seen its shares fall in the past year, by 19%.

A challenging economy could be bad news for profits at the company if investors start to pull out funds. But I see an upbeat long-term investment case here. Financial services is an area I expect to keep seeing strong customer demand. Legal & General has a long-established brand that helps it to capitalise on that. It also has a sizeable customer base.

The company has a progressive dividend policy, meaning it aims to grow its annual payout. That is never guaranteed but Legal & General has an impressive track record of dividend increases and currently yields a juicy 8.2%.

Smith & Nephew

Yet another FTSE 100 faller in the past year is medical devices manufacturer Smith & Nephew (LSE: SN). its shares are down 21% in 12 months.

But the company has a growth strategy that will hopefully see it increase both sales and profits in coming years. I like the company’s position within medical devices, an industry I expect to continue to benefit from rising demand thanks to aging, growing populations in many countries.

The pandemic showed one risk to the company, which is any slowdown in elective procedures hurting demand for its products. But with a backlog of operations outstanding, I expect positive business momentum for Smith & Nephew. I think it could be an attractive addition to my portfolio if I had the cash to invest.

But not all shares have fallen. Both among risers and fallers, I see some attractive options for my portfolio right now. As a believer in long-term investing, here are three shares I have either bought or would consider buying right now if I had spare money to invest.

Unilever

The investment case for consumer goods giant Unilever (LSE: ULVR) is fairly simple in my view.

It operates in market segments that are likely to see resilient demand from billions of users, such as shampoo and laundry detergents. The company’s collection of well-known and distinctive brands such as Marmite helps keep customers loyal.

That gives the firm pricing power. It has used that to combat rampant inflation. In the first half, for example, although volumes fell 1.6% compared to the prior year period, the company saw underlying sales growth of 8.1% thanks to higher prices.

Inflation remains a risk to profit margins, which decreased in the first half. But I think in the long term demand should be resilient and Unilever’s pricing power should be good for profits.

British American Tobacco

I already own shares in British American Tobacco (LSE: BATS). The company behind products such as Lucky Strike and Vuse is a cash flow machine thanks to the high margins and resilient demand of the tobacco industry.

Over time that could change. Cigarette smoking is in long-term decline and the company has a large debt pile that could eat up free cash flow.

However, I think its experience in managing changing markets across the globe for many decades already could help the tobacco manufacturer face such challenges. It has been expanding its non-cigarette business rapidly. Its portfolio of premium brands gives it pricing power.

Despite rising 27% over the past year, British American Tobacco shares still offer a dividend yield of 6.6%. That is higher than many other FTSE 100 shares. I regard it as attractive.

Legal & General

While those two consumer goods firms have seen their share prices increase in the past year, it is a different story at financial services powerhouse Legal & General (LSE: LGEN). The Legal & General share price has declined 16% over the past year.

But as a long-term investor, I feel upbeat about the outlook for the firm. I expect demand for financial services to remain strong. The company has a long-established brand that can help it win new clients and retain existing ones, without having to spend very heavily on marketing.

Weakening investor confidence could lead to some customers withdrawing money from investment products, hurting profits. But I see Legal & General as a well-run company that I expect to benefit from strong customer demand over the course of the coming years.

These FTSE 100 shares yield 8% and I recently bought them for my portfolio.

One sector that has taken a battering recently is insurance. In particular, I’ve been tracking two stocks I believe are in serious bargain territory.

Prudential

When it comes to growth stocks, the insurance sector doesn’t spring to mind. However, Prudential (LSE: PRU) is undoubtedly a growth business.

The company has reinvented itself lately. Its business model is now aligned solely to the long-term structural growth opportunities in Asia and Africa.

It offers a diversified suite of insurance products, including health and protection, which accounts for over a third of all new business profits.

Despite fast-rising prosperity, people in Asia still have low levels of insurance cover, with 39% of health and protection spend met by individuals directly. A large unmet need has created a vast health protection gap estimated at $1.8trn.

In the next 10 years, the size of the industry revenue pool across its core markets is expected to grow by $900bn. Translated to its Asia business, gross written premiums are projected to more than double in that time to over $60bn.

Of course, these are just estimates and there are no guarantees. At present, shareholders are more concerned with short-term headwinds. Rolling Covid restrictions in India, Malaysia and Singapore have dented margins. In Hong Kong, the closure of the border with Mainland China has resulted in overall annual premium equivalent (APE) in its largest market slump 10%.

Prudential’s share price is down 33% year-to-date. Yes, it could fall further. Nevertheless, I intend to buy its shares.

Legal & General

My second insurance stock pick is a traditional income one. Like Prudential, Legal & General (LSE: LGEN) has seen its share price plummet recently. It’s now down 29% year-to-date. This has had the effect of pushing up its forward dividend yield to 8.9%.

Normally, yields approaching 10% ring alarm bells. As a likely recession looms, dividend cuts can never be ruled out. However, I’m less concerned about L&G’s.

In the first half of 2022, it achieved 22% growth in cash generation and 14% growth in capital generation. The company remains confident in its ability to grow cash and capital faster than its dividend commitment.

This confidence is backed up by a number of growth drivers, including ageing demographics. As populations live longer, so too must their pensions. Organisations are increasingly turning to L&G to help them find solutions to their ongoing pension commitments. At the same time, individuals need to ensure that their retirement funds and other assets can finance longer retirements.

The accelerating share price sell-off is a direct result of the recent turmoil in the bond market. However, despite volatile markets, the group issued a press release to the effect that it hasn’t been forced to sell any gilts or bonds to shore up its capital position.

When markets are in turmoil, I always remember one of Warren Buffett’s classic quotes: “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”. In L&G, I’m seeing such an opportunity and I’ll be buying.