How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal & General shares in the future.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

happy senior couple using a laptop in their living room to look at their financial budgets

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The price of Legal & General (LSE: LGEN) shares is now even lower than it was last November. After a great start to the year, it flipped-flopped around the 250p level before deciding that anything above 220p is too ambitious.

That’s okay, I’m not even angry. 

In the long run, my shares continue to deliver excellent returns via dividends. Now at 9.5%, Legal & General has the third-highest yield on the FTSE 100.

Should you invest £1,000 in Admiral right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Admiral made the list?

See the 6 stocks

What’s more, it has a solid track record of increasing payments. They’ve risen at an average rate of 13.3% per year for the past 15 years.

But lest we forget, past performance is no indication of future results! So will the dividend giant continue to deliver as it has in the past?

To answer that question, I’m taking a look at the stock’s dividend forecast.

Earnings and dividend forecast

First, I should highlight that dividend estimates have declined since June, when the company announced a major overhaul. This included the sale of its housebuilding business and the departure of its asset management chief. It also introduced a new shareholder strategy, including a £200m share buyback programme

The share price slipped 5% on the news and has struggled to recover since. However, the forecast is still relatively positive looking ahead. 

The yield has increased from 6% in 2019 to almost 10% this year, largely driven by a falling price. Analysts expect it to continue climbing to above 10% next year and 10.29% in 2026.

Financial yearDividend per shareDividend yield
202421.3p9.8%
202521.8p10.04%
202622.3p10.29%

But a rising yield is not worth much if the share price keeps falling.

The growth forecast gives some hope that it won’t. Sales are expected to rise 5.15% next year and a further 5% in 2026. Net income is expected to follow suit, forecast to rise 33% next year and 8.29% in 2026.

Meanwhile, the annual dividend is forecast to increase by less than half a penny each year. The final dividend for 2024 is set at 21.3p, expected to reach 21.8p in 2025 and 22.3p in 2026. 

What’s most interesting is that earnings per share (EPS) is expected to outperform dividends, rising to 24p per share next year and 26p by 2026. 

Analysts are moderately positive about the share price, with an average 12-month target of 262p — up 20.5% from today’s price.

Screenshot from TradingView.com

Considerations

There are a few factors that threaten Legal & General’s performance, such as the recent hikes in National Insurance and minimum wage. These are likely to eat into profits during the next earnings round.

As it stands, earnings don’t quite cover the current dividend so a further drop could become an issue. If EPS doesn’t increase as forecast, the company may have to cut dividends. Both these situations could threaten the share price.

Overall, I think the current price is good value and things look likely to improve from here. Of course, that’s on the assumption that present conditions will be maintained. Right now, a lot is going on in the world, so any short-term predictions should be taken with a pinch of salt.

But long-term? I plan to be holding my Legal & General shares well into retirement.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy 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.

Mark Hartley has positions in Legal & General Group Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »