9% dividend yield! 1 FTSE 100 dividend stock to consider right now

There’s no denying this FTSE 100 stock has a high dividend yield now, but is the payment sustainable and will it grow over time?

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I’m considering FTSE 100 dividend stock Legal & General (LSE: LGEN) for my long-term diversified portfolio. And the key initial attraction is its huge dividend yield.

The insurance, wealth and retirement business expects to pay a dividend of just over 21p per share in 2024. And with the share price near 227p, the forward-looking dividend yield is a little above 9%.

Is it sustainable?

But before I become too excited by that gigantic yield, I’m going to consider whether it’s sustainable. One rule of thumb to be wary of is that any yield above 7% has the possibility of being more of a warning than an attraction. 

Although that’s not always the case. Sometimes stocks with high yields really are bargains being handed to us by a fickle stock market.

And in the case of Legal & General, the multi-year dividend record is encouraging. Since at least 2017, the shareholder payment hasn’t fallen from year to year and most times has risen a little. So that’s the first tick on my checklist.

The company is well known as an insurance provider. But that’s only part of the story. It’s also a big player in the market for savings and investment products. And it was one of the first organisations to offer low-cost, mechanically-managed, index tracker funds.

A diversified business

L&G serves institutions as well as retail investors. And one division operates as a global pension risk transfer provider. And to find out more about that, I’d be inclined to dig in with deeper research!

There’s also an investment arm. And on top of that, Legal & General is one of the biggest asset management businesses in Europe.

Meanwhile, the investment arm of the business holds a wide range of assets in multiple sectors.

So the diversification in operations prompts me to give the business another tick on my checklist. And although a lot of the firm’s business is UK-facing, the company does operate abroad. And the directors think the there’s much potential for further expansion internationally. So that’s another tick.

Cyclical vulnerability

However, as a business operating in the financial sector, L&G is exposed to general cyclical influences. And that could be one reason for the market keeping its valuation suppressed.

Meanwhile, the multi-year action of the share price has been broadly sideways. And I’m not expecting that situation to change much in the years ahead. But recent outlook statements have been upbeat. And I’m optimistic about the potential for a period of general worldwide economic prosperity ahead.

Nevertheless, the company’s cyclical vulnerability warrants a question mark on my checklist. Although it has to be said, the business was resilient through the pandemic and the directors didn’t cut the dividend.

To me, Legal & General is not as defensive and potentially steady as other businesses such as National GridUnilever and Imperial Brands. But the big dividend yield makes up for that. And because I’m expecting a bullish stock market ahead, I think the stock is well worth further consideration now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands Plc and Unilever Plc. 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.

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