This could be a worthy addition to your high yield portfolio.
The insurance industry has been having a hard time of late, with Hiscox (LSE: HSX) posting a substantial loss for the first half of this year. So what of FTSE 100 stalwart Legal & General (LSE: LGEN)?
A steady performer
Well, the UK's fourth biggest insurer made an operating profit of £523m in the first six months of 2011, compared to £542m in the same period of 2010 -- that's a fall of 3%.
The investment management arm outperformed, with a half-year operating profit of £117m, up from £98m in the corresponding period last year. Funds under management grew 13% to £362bn.
The international side of the business also did well, with worldwide sales up 4% to £920m.
This indicates to me a steady performance from the company in difficult times. The business is also generating huge amounts of cash. This led L&G to give a fillip to shareholders by raising its interim dividend by 25% to 1.66 pence a share.
A strong dividend record
With such solidity, Legal & General looks to me to be a good share to hold as we weather the storm of debt crises and economic malaise which is currently battering our economy. The company is on a P/E ratio of 7.7, and a dividend yield of over 5%.
The company's recent dividend record is impressive: the 2009 final dividend was up by 33%, the 2010 final dividend rose by 24%, and now the interim for 2011 has gone up by 25%. And the CEO, Tim Breedon, has hinted that there will be more dividend growth to come.
Other UK insurance companies have perhaps had more attention over the past few months as potential value plays, notably Aviva (LSE: AV). But Legal & General is also worth a look. The company is cheap and it is producing a high and rising income, so I would say it merits serious consideration as an addition to your high yield portfolio.
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