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Any stock with a yield approaching double figures tends to set off alarm bells in my head. More often or not, it’s a pretty strong signal that the dividend’s at risk of being cut.
With this in mind, I’ve been thinking about whether a certain FTSE 100 stock is a nightmare-in-waiting for unwary buyers. Or is it, in fact, an unmissable opportunity?
Monster yield
The company in question is Legal & General (LSE: LGEN). And from the off, its income-generating credentials look top-notch. As I type, the shares have a forecast dividend yield of 9% for FY25, making it the biggest payer in the UK market’s top tier. For perspective, a fund tracking the index would bring in around 3.2%.
Legal & General stock looks cheap too, at least relative to the market as a whole. A price-to-earnings (P/E) ratio of 11 is below the average in the FTSE 100, albeit not a screaming bargain in among…
