Legal & General‘s (LSE:LGEN) share price has slumped over the last month. At 251.7p per share, the FTSE 100 company’s down 8% following the release of disappointing trading numbers. The broader risk-aversion sweeping global stock markets hasn’t helped, either, as the Middle East has plunged into crisis.
That share price drop is double the broader Footsie’s 4% decline. It’s got me wondering: could Legal & General shares be a great buy for value investors?
The great and the good
At first glance, possibly not. It depends on whether you’re searching for more dividends or growth for your money.
One great thing about Legal & General is its enormous dividend yield, which has nudged higher as the share price has dropped. For 2026, this sits at 8.8%, which smashes the FTSE 100’s forward average of 3.2% out the park. Today’s yield is also far higher than the 10-year average of 7.7%.
Yet in terms of expected earnings things aren’t as impressive. The forward price-to-earnings (P/E) ratio is 10.2 times, which is above the long-term reading of 9.5 times. That is below the Footsie average of 12–13, in better news, but it doesn’t smack of stunning value.
Near-term risk
On balance then, I’d consider Legal & General’s 8% price drop as a nice little dip to take advantage of, rather than a screaming bargain buying opportunity. Especially when you consider the company does face notable problems, as this month’s trading update shows.
One problem it needs to address is recent underperformance at its asset management unit. But this might be easier said than done — if risk-aversion continues to sweep across markets, net inflows could heat up. Pressures here are made worse by incredible levels of market competition. Last year, asset management profits basically flatlined as the unit recorded only “modest growth.”
Performance was better elsewhere, meaning group core operating earnings per share rose 9%, at the top end of guidance. But if economic growth cools and inflationary pressures rise, can Legal & General keep delivering? In the near term, I’m not so sure.
Bottom line
Yet this doesn’t concern me too much as a Legal & General shareholder myself. This is because I buy and hold shares with a view to holding for a decade or more. Over this time horizon, I’m confident the company will deliver exceptional returns.
For one, the business remains (and should continue to be) an impressive cash-generating machine. The result should be further terrific dividend growth and payouts that beat the broader market. Even if profits do disappoint over the near term, I’m optimistic its compelling dividend story will remain intact, supported by the firm’s famously strong balance sheet. Its Solvency II ratio was 210% as of December.
I also think Legal & General’s share price will accelerate over the coming years. The world’s surging elderly population — combined with increasing interest in financial planning — are a winning combination that could supercharge revenues from current levels.
They might not be jaw-droppingly cheap. But I believe Legal & General shares still deserve serious consideration from all savvy investors today.
