Legal & General just paid me £266.85p! All part of my plan to make a million

Harvey Jones just received a small cash payment into his pension, courtesy of his holding in Legal & General shares. There’s more to come.

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I bought Legal & General (LSE: LGEN) shares on three occasions last year because I thought the FTSE 100 insurer offered an unmissable dividend income.

The Legal & General share price isn’t so exciting. It’s up a modest 5.49% over the last year. But I feel it will improve given time. It was the dividend income that got me, though. Legal & General’s current trailing yield is 8.1%, far higher than I could get from any savings account.

Better still, that’s forecast to rise to 8.44% in the 2024 financial year, and a whopping 8.93% in 2025. So I’m not just getting a high income, but one that should rise over time.

FTSE 100 dividend share

Yields are all very well but can seem a bit academic. I find that changes when the money lands in my trading account, as it just has. Then I see the benefits in pounds and pence.

I invested £4,000 buying 1,779 shares in Legal & General last year and received my first dividend of just over £100 on 22 September. I automatically reinvested it – as I do with every dividend – to buy 45 more shares. That lifted my total holding to 1,824.

Yesterday, Legal & General paid me another £266.85, in the shape of its final 2023 dividend of 14.63p per share. That should give me another 105 shares. So I’ll have 1,929 shares, of which 150 were effectively given to me free.

On 27 September, Legal & General will pay me another dividend. No prizes for guessing what I’ll do with that.

And my point? It’s this. Too many newbie investors expect to make quick money, but that’s not how it works. Not the way I do it, anyway. I’m building a balanced portfolio of high-yielding FTSE 100 dividend stocks. They may never shoot the lights out, but they should keep making profits, year after year.

Top income stock

And off they do, the board will keep paying dividends, which I’ll keep re-investing, which will pay me even more dividends, all of which will roll up over time.

Obviously, I don’t just hold Legal & General. I bought a host of high-yielders including Lloyds Banking Group, M&G, Taylor Wimpey, and Phoenix Group Holdings.

On 9 May, M&G paid me £408.27. Next day, Taylor Wimpey paid me £158.78. Later that month, Lloyds chipped in with £172.09 and Phoenix added £137.24. That’s all passive income, that I don’t have to lift a finger to generate. It’s not riches, but I only bought these stocks last year. Next year, I hope they pay me more.

Dividends aren’t guaranteed. Any of these companies could cut shareholder payouts at any time. Their share prices could fall, hitting my capital. There’s a slim chance one could go bust.

Yet by investing in a spread of around 25 shares I can mitigate these risks. I’ll keep adding to my portfolio, whenever I have cash to spare. I may not make a million – or even come close – but this looks like my best shot of doing it. One dividend at a time.

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, Phoenix Group 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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