Across the entire FTSE 100, just two companies currently offer dividend yields above the 7% threshold that income investors typically regard as genuinely compelling.
The gap between those two yields is striking: Legal & General (LSE: LGEN) sits at 7.07%, while Ithaca Energy (LSE: ITH) towers above it at 10.47%, a figure that immediately raises questions about sustainability.
A useful rule of thumb in income investing is that an unusually high yield almost always reflects a risk that the market has already priced in, since a risk-free double-digit payout would attract buyers and push the yield back down.
That logic applies directly here, and understanding what each company’s dividend is actually built on matters more than the headline percentage figure alone.
Ithaca Energy, a North Sea oil and gas producer and a relatively new entrant to the FTSE 100, has seen its fortunes tied closely to elevated oil prices, which have supported its generous distributions in recent periods.
Its dividend policy commits the company to paying “15%-30% of post-tax net cash from operating activities,” a formula that produces an eye-catching yield but one that fluctuates directly with commodity prices.
Analyst consensus points to a modest increase in Ithaca’s dividend across the next two financial years, though geopolitical developments, including any resolution to the Iran situation potentially influenced by US political shifts, could weigh heavily on crude prices and undermine that forecast.
Legal & General’s income story is a more familiar one for FTSE 100 watchers; the insurer and wealth manager has maintained a yield in the 7%-10% range for several years running.
Its current policy targets annual dividend growth of 2%, a rate that is steady but trails inflation and represents a step down from the previous commitment of 5% yearly increases.
The stock is not without its own vulnerabilities: as a financial services business sensitive to macroeconomic conditions, its dividend was frozen in 2020 during the pandemic and was cut during the 2008 financial crisis.
Against that backdrop, Legal & General’s 40% share price gain since early 2025 demonstrates that income and capital appreciation are not mutually exclusive for patient shareholders.
Weighing both options, Legal & General’s yield appears the more durable of the two, underpinned by a diversified financial services model rather than the volatile economics of commodity extraction.
For investors prioritising income they can rely on across different market environments, the lower headline yield from Legal & General may represent the stronger foundation over the long term.