7.7% yield and a P/E of 6.5! I’m desperate to buy more of this FTSE 100 share in 2024

One top dividend-paying FTSE 100 share is at the top of my buy list for 2024. It’s showing signs of life and I’m hoping this is just the start.

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I love this FTSE 100 share so much that I bought it on three occasions in 2023. I’d like to buy it next year, too.

The share in question is insurance company and fund manager Legal & General Group (LSE: LGEN). It looks dirt cheap and offers a brilliant level of income, which are the two things I look for when buying shares at the moment.

Other FTSE 100 companies have a similar profile, and I’ve been buying them too. Lloyds Banking Group, fund manager M&G and housebuilder Taylor Wimpey are all incredibly cheap high yielders. I’d top up my stake in any of them like a shot, but sadly I can’t purchase every stock that takes my fancy. So I’m taking aim at L&G.

Great income stock

I bought its shares in April, July and August, and reinvested my first dividend in September. Overall, I’m up a solid 10.99%. Yet L&G didn’t do particularly well in 2023. Its share price is ending the year almost exactly where it began. Coupled with today’s low valuation, it still offers plenty of room for growth.

The Legal & General share price has been showing signs of life lately. It’s jumped 9.89% in the last month alone, even though the company posted no meaningful news in that time.

The trigger is the growing hope that interest rates have now peaked and will start falling in 2024, as the inflationary threat recedes. That will boost many stocks listed on the FTSE 100, but L&G in particular.

Falling interest rates should boost stock markets, and that will help the company by increasing net customer inflows to its popular range of low-cost funds, and total net assets under management too.

Time to compound

When central bankers start cutting base rates, this will also reduce bond yields and savings rates. As rival sources of yield fall, that will make high-yielding shares like this one look more attractive. This could attract new investors, and not just from the UK.

L&G has a more-than-7.7% yield today and a price-to-earnings (P/E) ratio of 6.5! But it’s forecast to yield 8.13% and 8.54% for its next two years. That’s already way better than any bond or cash can offer today, and the gap is only going to widen. The difference is the dividends aren’t guaranteed, so carry extra risk.

There are other worries. L&G shares may climb nicely in 2024 but are unlikely to shoot the lights out. The stock trades at similar levels to a decade ago. Just because a company is cheap, doesn’t mean it’s automatically going to recover its lost value.

Another worry is that 2024 will be bumpy. The US could still fall into a recession. So could the UK. If the Israel-Hamas war spreads, all bets are off.

The good news is that today’s low share price gives me a financial safety net. I plan to add to my haul of L&G shares early in the New Year, whatever happens. Then I’ll hold them for years, to give my dividend income and any share price growth plenty of time to roll up.

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.

Harvey Jones has positions in Legal & General Group Plc, Lloyds Banking Group Plc, M&G Plc, and Taylor Wimpey Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc and M&G 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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