Assessing the Sustainability of Legal & General Group PLC's Upcoming Dividend
Legal & General Group PLC (LGGNY, Financial) recently announced a dividend of $0.93 per share, payable on 2024-06-13, with the ex-dividend date set for 2024-04-25. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Legal & General Group PLC's dividend performance and assess its sustainability.
What Does Legal & General Group PLC Do?
Legal & General Group PLC operates across four broad business areas: retirement, investment management, capital investment, and retail. The retirement business provides guaranteed retirement income for corporate pension scheme members. The Investment Management business offers services for both individuals and corporations, including pension fund management. Capital investment involves using customers' pension assets and the group's shareholder capital to make long-term investments in sectors such as clean energy, housing, and SME finance. The Retail business caters to UK retail retirement and protection solutions and US brokerage term life insurance. The majority of its assets under management are concentrated in the United Kingdom and Europe.
A Glimpse at Legal & General Group PLC's Dividend History
Legal & General Group PLC has upheld a consistent dividend payment record since 2003, with distributions occurring bi-annually. Since 2012, the company has increased its dividend annually, earning it the status of a dividend achiever, a title reserved for companies with at least a 12-year history of consecutive dividend increases. Below is a chart illustrating annual Dividends Per Share to track historical trends.
Breaking Down Legal & General Group PLC's Dividend Yield and Growth
Currently, Legal & General Group PLC boasts a 12-month trailing dividend yield of 7.56% and a 12-month forward dividend yield of 7.99%, indicating anticipated dividend increases over the next year. Over three years, the annual dividend growth rate was 3.70%, which expands to 4.20% per year over five years, and a significant 8.40% over the past decade. Based on these figures, the 5-year yield on cost for Legal & General Group PLC stock is approximately 9.29%.
The Sustainability Question: Payout Ratio and Profitability
When evaluating dividend sustainability, the dividend payout ratio is a key metric, indicating the proportion of earnings allocated to dividends. Legal & General Group PLC's ratio stands at 2.65 as of 2023-12-31, which may be a point of concern for dividend sustainability. Additionally, the company's profitability rank is 4 out of 10, which could further raise questions regarding the longevity of its dividends, despite the company reporting positive net income annually for the last decade.
Growth Metrics: The Future Outlook
Legal & General Group PLC's future dividend sustainability is also dependent on growth metrics. With a growth rank of 4 out of 10, the company's growth prospects appear limited. Its revenue per share and 3-year revenue growth rate have underperformed 72.74% of global competitors, with an average annual decrease of -10.20%. The 3-year EPS growth rate also lags behind 82.53% of global competitors, with an average decrease of -29.70% per year. Lastly, the 5-year EBITDA growth rate of -23.30% underperforms 93.31% of global competitors, further casting doubt on future dividend growth.
Next Steps
Considering Legal & General Group PLC's dividend payments, growth rate, payout ratio, and profitability, value investors should weigh these factors carefully. While the company's dividend history is commendable, the current metrics suggest potential challenges ahead for dividend sustainability. It is crucial for investors to monitor the company's financial health and growth prospects to make informed decisions. For those seeking high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener to aid in the search for viable investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
