Legal & General (LSE: LGEN) has outperformed the FTSE 100 since the start of 2026, while also holding the distinction of being the index’s highest-yielding stock.
The insurer and asset manager has built a strong reputation among income investors through a decade of consistent dividend growth, even navigating the pandemic without cutting its payout.
Between 2017 and 2025, the group raised its dividend every year, with increases ranging from 5% to 7%, before slowing to a 2% rise in 2026 to bring the payout to 21.79p per share.
Looking ahead, the group has pledged to raise its dividend by 2% annually in both 2026 and 2027, giving shareholders a degree of visibility over near-term income returns.
Broker forecasts currently suggest the shares are around 8% overvalued, which tempers expectations for capital appreciation over the next 12 months.
Based on those forecasts, a £4,001.34 investment made today would be worth approximately £3,983.64 including £302.41 of dividends over the next year, a modest outcome in headline terms.
However, long-term investors may find more to like in the group’s strategic position than in short-term price targets, particularly given its growing pipeline of pension fund mandates.
The higher interest rate environment has also supported demand for annuities, a market in which Legal & General holds a significant presence and operational scale.
During the first half of 2026, the group reported a 7% increase in core operating profit and an 11% rise in core operating earnings per share, with its asset management division performing particularly strongly.
A Legal & General press release accompanying its 2026 half-year results stated: “Our scale and the connections between our businesses remain a clear competitive advantage, which we are building further through improvements in operating efficiency. We are on track to meet or exceed our strategic targets.”
The group’s balance sheet carries considerable exposure, with £576bn of bonds, equities, and investment properties recorded at 30 June, meaning any global financial crisis could put pressure on earnings and, by extension, the dividend.
Increasing competition within the pensions and asset management industries also presents a risk, as both new entrants and established rivals seek to capture market share in a growing sector.
Despite these risks, the group’s track record of returning cash to shareholders, including via share buybacks alongside dividends, continues to attract investors seeking reliable income above savings account rates.
For income-focused investors weighing up UK equities, Legal & General’s combination of yield, scale, and strategic momentum makes it a stock that remains difficult to overlook in the current environment.