Legal & General and LondonMetric Property are two FTSE 100 dividend stocks currently offering some of the most attractive yields available to UK income investors.
With inflation putting pressure on household finances, a reliable stream of dividend payments has become an increasingly important tool for building passive income over time.
Legal & General, trading on the London Stock Exchange under the ticker LGEN, is an insurance and asset management firm with roots stretching back almost 200 years.
The company currently sports a dividend yield of 8.1%, which is the highest of any stock in the entire FTSE 100 index right now.
To put that in concrete terms, £20,000 invested in the shares could generate approximately £1,620 in passive income based on the current yield.
The bulk of Legal & General’s annual dividend is due to be paid out on 4 June, with a smaller interim dividend also scheduled for September.
However, analysts at Jefferies have recently turned bearish on the stock, noting that net surplus generation is expected to stay flat at around £1.2bn through 2028.
That flat trajectory raises questions about dividend sustainability, since the payout would only just be covered, potentially forcing a cut to improve capital flexibility in future.
The share price has gone broadly nowhere for a decade, reflecting the market’s view that Legal & General carries a higher level of risk than many income investors might assume.
The second stock, LondonMetric Property, trades under the ticker LMP and is a real estate investment trust, legally required to distribute at least 90% of taxable income to shareholders as dividends.
The share price has fallen by 33% in less than four years, largely due to the higher interest rate environment making borrowing significantly more expensive for property companies.
Nearly 53% of LondonMetric’s £7.6bn portfolio is allocated to urban logistics, including distribution centres for online shopping, with tenants including Amazon, Primark, and Next.
E-commerce continues to grow strongly while available land for new logistics sites remains scarce, creating what the company views as a structurally attractive supply and demand dynamic.
The entertainment and leisure segment accounts for 20.2% of the portfolio, with tenants including Travelodge and Merlin, the owner of Alton Towers and Thorpe Park, with contractual rent increases applying to 98% of rents in that segment.
If interest rates remain elevated due to persistent inflation, LondonMetric will likely continue to face headwinds, and the stock could underperform relative to other FTSE 100 income plays.
Despite those risks, LondonMetric’s 6.6% dividend yield, combined with its turnaround potential, makes the stock worth considering at its current price of 190p.