Legal & General (LSE: LGEN) shares have climbed 19.5% over the past 12 months, finally showing some momentum after a prolonged period of underwhelming performance.
The FTSE 100 insurer and asset manager also offers a trailing dividend yield of 7.5%, lifting total returns over the past year to close to 27% for shareholders who held throughout.
Despite that combined return, Legal & General continues to trail fellow FTSE 100 financials M&G and Standard Life, which have risen 33% and 38% respectively over the same period.
Bumpy profit performance has been a persistent drag on the stock, with the company operating across long-term businesses including pensions, annuities, and asset management that are exposed to market and interest rate fluctuations.
There are, however, signs of improvement in the underlying business, with Legal & General’s 2025 operating profit before tax rising 5% to £2.65bn and operating cash generation increasing 8% to £1.8bn.
Rising demand for workplace pensions and retirement products represents a significant pool of potential customers, as does the growing bulk annuity market, offering some grounds for longer-term optimism.
A key risk remains the company’s £1.2 trillion in assets under management, which would shrink in a market downturn and reduce commission-based income accordingly.
Analyst sentiment is notably cautious, with a consensus one-year share price target of 271p against today’s 293p, implying a fall of around 7.8% from current levels.
The forecast dividend yield for 2026 stands at 7.6%, but when combined with that projected share price decline, investors could face a slightly negative total return of 0.2%, potentially turning a £12,000 stake into just £11,976 by September next year.
Broker ratings paint a concerning picture, with 13 analysts offering stock ratings in the past three months producing one Strong Buy, two Buys, one Hold, one Sell, and eight Strong Sell recommendations.
That proportion of Strong Sell ratings is unusually high for a FTSE 100 constituent and signals that many professional investors believe the recent rally may have run ahead of fundamentals.
High-yielding shares also face a structural challenge in that dividend payments remove cash from the business, putting natural downward pressure on the share price and making sustained momentum harder to build.
Income-focused investors may still find the stock appealing given its yield, but the weight of analyst opinion and the track record of false dawns over the past decade suggest caution is warranted.