![\"DIVIDEND](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/03\/a1e5e73fb0216911dc35e5d59d76248f.jpeg\")
Image source: Getty Images <\/p>\n Image source: Getty Images <\/p>\n
Legal & General (LSE: LGEN) shares are a very popular investment. It isn\u2019t hard to see why \u2013 they offer a dividend yield of around 9.2% today.<\/p>\n
However, if you\u2019re considering investing in the insurance giant, there are some risks to be aware of. Here are some things to know about the FTSE 100 stock and its massive yield.<\/p>\n
When a stock offers a monster dividend yield, it can be a signal that the market sees the dividend payout as unsustainable. Big institutional investors (the \u2018smart money\u2019) may have bailed on the stock, pushing its share price down and its yield up.<\/p>\n
Now, zooming in on Legal & General, the issue of payout sustainability is starting to come into focus. Because the company\u2019s earnings are no longer covering the dividend payout (for 2025 earnings per share were 20.93p while dividends per share were 21.79p).<\/p>\n
This issue was brought up by analysts at UBS recently. They argue that Legal & General\u2019s currently paying out more than it can afford, noting that earnings are unlikely to cover the dividend between now and 2030.<\/p>\n
Worryingly, the UBS analysts \u2013 who currently have a 250p price target on the stock \u2013 pointed out that in a severe market stress scenario, Legal & General\u2019s solvency ratio (an important measure of financial health for insurers) could fall dramatically. This could result in the company having to reduce its dividend payout to bolster its balance sheet.<\/p>\n
Now, UBS isn\u2019t the only broker that has some concerns about the shares right now. Another is RBC Capital. Last week, it cut its earnings forecasts for the insurer and reduced its price target to 220p. That\u2019s obviously below the current share price.<\/p>\n
If the stock was to fall to that level, investors could see any dividend income offset by share price losses. That\u2019s not ideal.<\/p>\n
RBC\u2019s analysts \u2013 who have an Underperform rating on the stock \u2013 are worried about the company\u2019s momentum in the pension risk transfer market (where insurers take on the corporate pension liabilities in exchange for a premium). It sees competition increasing here as several rivals are aggressively trying to capture market share.<\/p>\n
Now, just because these two brokers have expressed some concerns about the stock and its dividend doesn\u2019t mean it isn\u2019t worth considering. If an investor\u2019s comfortable with the risks here \u2013 which include share price weakness and lower-than-anticipated dividend income \u2013 it could still be worth a look, given the high yield currently on offer.<\/p>\n
I\u2019ll point out that the company\u2019s valuation is quite reasonable. Currently, the forward-looking price-to-earnings (P\/E) ratio is under 10.<\/p>\n
This isn\u2019t a stock I\u2019d take a large position in however. While the dividend yield looks attractive today, there are definitely some risks under the surface and investors may see the payout cut in coming years.<\/p>\n
In my view, there are much safer income stocks in the market today.<\/p>\n
The post Thinking of buying Legal & General shares for the 9% dividend yield? Read this first appeared first on The Motley Fool UK.<\/p>\n
More reading<\/p>\n
Edward Sheldon has no positions in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Legal & General (LSE: LGEN) shares are a very popular investment. It isn\u2019t hard…\n","protected":false},"author":2,"featured_media":500813,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,45298,48923,1280,59,42079,30324,56,54,55],"class_list":["post-500812","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-dividend-income","tag-dividend-payout","tag-dividend-yield","tag-gb","tag-institutional-investors","tag-share-price","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/500812","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=500812"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/500812\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/500813"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=500812"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=500812"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=500812"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}