Close Menu
FintechFetch
    FintechFetch
    • Home
    • Fintech
    • Financial Technology
    • Credit Cards
    • Finance
    • Stock Market
    • More
      • Business Startups
      • Blockchain
      • Bitcoin News
      • Cryptocurrency
    FintechFetch
    Home»Stock Market»Are Legal & General shares gaslighting me?
    Stock Market

    Are Legal & General shares gaslighting me?

    FintechFetchBy FintechFetchFebruary 27, 2025No Comments3 Mins Read
    Share Facebook Twitter Pinterest LinkedIn Tumblr Reddit Telegram Email
    Share
    Facebook Twitter LinkedIn Pinterest Email


    Image source: Getty Images

    I’ve fallen for the charms of Legal & General (LSE: LGEN) shares. I bought them in 2023 because they looked like a brilliant income play, with some growth prospects a little bit further down the line. Now I’m having doubts.

    With a stunning dividend yield of 8.3%, it’s easy to see the appeal for income seekers. 

    However, with the share price down 1.4% over the last year and a hefty 17% over five years, a significant chunk of those dividends have been wiped out by capital losses. Is this a case of one step forward, two steps back?

    Is the FTSE 100 stock manipulating me?

    One red flag is its price-to-earnings (P/E) ratio, which currently stands at a steep 32 following a recent drop in earnings. That’s an eyebrow-raising figure. Legal & General traded at just six times earnings when I bought it in 2023. It looked a bargain then. I’m not sure it was.

    I’m concerned that I’ve been gaslighted into believing this is a bargain, only to end up overpaying for a business that is struggling to grow.

    In December, the company released a positive set of results that offered some reassurance. The board said it was on track to hit its guidance for mid-single-digit growth in operating profit across full-year 2024.

    With forecast cumulative Solvency II capital generation of £5bn-£6bn between 2025 and 2027, the dividend looked well funded.

    Investors welcomed these figures, and the shares have rebounded 7% over the last three months, to be fair. However, the recovery has been hesitant.

    The Legal & General share price got another lift on 7 February, when CEO António Simões announced the sale of the US protection business to Japanese peer Meiji Yasuda in a $2.3bn deal. 

    Meiji Yasuda will take a 5% stake in Legal & General, which Simões hailed as a “transformative transaction”. Again, the shares jumped. Again, it didn’t last. They’ve returned to their customary slumbers.

    Is the dividend alone enough?

    There is a significant opportunity ahead. As interest rates fall, Legal & General’s high yield could become even more attractive. 

    Lower rates tend to boost financial stocks by making their debt obligations more manageable and increasing the value of their investment portfolios. In theory, this should help the company regain momentum.

    Yet there are two problems. First, UK interest rates have been cut three times with little impact on the share price.

    Second, there’s no guarantee they will be cut much further, at least in the short run, as inflation picks up.

    Legal & General might not be a classic value trap, but it isn’t a clear-cut income play either. The stock sits in a frustrating middle ground, offering high dividends but little in the way of capital appreciation. For investors comfortable with that trade-off, it may still be a worthy addition to a portfolio.

    I love getting my dividends, and I won’t sell. More gaslighting by Legal & General? Possibly. But so far I’m up around 20%, despite minimal share price action. I’ll treat any growth as a bonus. And carry on questioning my sanity.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Previous ArticleSEC Affirms They Typically Do Not Qualify As Securities
    Next Article SEC Closes Investigation Into Gemini, Winklevoss Seeks Reimbursement
    FintechFetch
    • Website

    Related Posts

    Stock Market

    Prediction: this growth stock will outperform Nvidia, Tesla, and Rigetti over the next 2 years

    October 18, 2025
    Stock Market

    Up 5,000% in a year, is Nasdaq stock Rigetti (RGTI) a ticket to wealth?

    October 18, 2025
    Stock Market

    I asked ChatGPT what could save the Aston Martin share price

    October 17, 2025
    Add A Comment
    Leave A Reply Cancel Reply

    Top Posts

    Behind the Idea: Bank of London

    August 7, 2025

    Oil prices are down following Gaza ceasefire deal

    October 10, 2025

    7 CEOs—and one chief commercial officer—explain how they actually use AI to do their jobs

    July 28, 2025

    Undercover Sex Trap Rocks Chinese BTC Holders: 6 BTC Stolen In Sextortion Scam Honeypot

    March 28, 2025

    Bourgeois Bohème Lifts the Curtain on Dual-Sided Gold-Coated Contactless Cards

    June 1, 2025
    Categories
    • Bitcoin News
    • Blockchain
    • Business Startups
    • Credit Cards
    • Cryptocurrency
    • Finance
    • Financial Technology
    • Fintech
    • Stock Market
    Most Popular

    Best Wallet Token Presale Passes $9.5M as Analyst Thinks it Could be the Next Crypto to Explode in 2025

    February 13, 2025

    [LIVE] Massive Crypto Liquidations to Precede A Big Pump: Best Crypto To Buy Now

    August 2, 2025

    BNB Joins the Four-Digit Club – But This Time, It’s Different

    September 20, 2025
    Our Picks

    Bitcoin Crashes To $105,000, Sentiment Sinks Into Extreme Fear

    October 18, 2025

    What Happens to Card Schemes in a World Dominated by Account-to-Account Payments?: By Christoffer Hernæs

    October 18, 2025

    Banking with MrBeast?

    October 18, 2025
    Categories
    • Bitcoin News
    • Blockchain
    • Business Startups
    • Credit Cards
    • Cryptocurrency
    • Finance
    • Financial Technology
    • Fintech
    • Stock Market
    • Privacy Policy
    • Disclaimer
    • Terms and Conditions
    • About us
    • Contact us
    Copyright © 2024 Fintechfetch.comAll Rights Reserved.

    Type above and press Enter to search. Press Esc to cancel.