Legal & General stock price has held steady in the past few weeks, moving from a low of 230p in September to the current 248p. It has jumped by 30% from its lowest level this year, bringing its market capitalization to over £18.8 billion. This article explores whether LGEN stock is a good buy as its dividend yield remains at 8%.
Legal & General’s business is doing well
LGEN, the giant British insurance company, is doing well, with its revenue and profitability continuing its upward trajectory.
The most recent results showed that the company’s earnings-per-share (EPS) rose by 9% in the first half of the year to 10.94p, up from the 10.07p it made in the same period last year.
This growth happened across its three main businesses, institutional retirement, asset management, and retail, with its retail customers growing to over 12.4 million.
Its retail assets rose to over £300 billion, and the management expects to have between £40 billion and £80 billion in Workplace DC by between 2024 and 2028. It also expects that the retail operating profit will have a compounded annual growth rate (CAGR) of between 4% and 6% in this period.
At the same time, the management has continued to simplify its business by selling its US protection business and inking a partnership with Meiji Yasuda. It has also sold assets in its Corporate Investment Units as it seeks to become a simpler organization.
At the same time, the company has announced several major deals, including its investment in Propium Capital Partners, which will complement its stake in Taurus. The goal is for the company to become a major player in the real estate industry.
The recent results showed that the company’s core operating profit rose to £859 million in the first half of the year from £809 in the same period last year. At the same time, the company’s profit after tax rose to £316 million from the previous £226 million.
Legal & General is most loved because of its dividend payouts to investors as it has become one of the highest-yielding companies in the FTSE 100 Index.
It has a dividend yield of 8.73%, higher than the FTSE 100 Index average of 3.12%. It is also higher than the British inflation of 3.6%, making it an ideal company for investment income.
Indeed, the management continues to simplify its operations and expand in high profitable areas to boost its growth. It also has a encouraging ratios, including a capital coverage ratio of 217%. The management is also controlling costs, with its underlying cost growth rising by 1%.
LGEN share price technical analysis
LGEN stock chart | Source: TradingView
The daily timeframe chart shows that the LGEN share price bottomed at 230p, its lowest level in September and October this year. It has now rebounded to 248p as the management continues to improve its operations.
LGEN stock price has now moved slightly above the key resistance level at 247p, its highest level on November 12. It has also retested that level, confirming a break-and-retest pattern.
The stock remains above the 50-day and 100-day Exponential Moving Averages (EMA), which have made a bullish crossover pattern..
Therefore, the most likely scenario is where the stock continues to rise, with the next key level to watch being at 260p, its highest level in August, up by 4.8% from the current level. A move below the key support level at 240p will invalidate the bullish forecast.
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