Yields are important to me as an investor. Because it’s an indicator of the amount of passive income I can want to receive in dividends.If I invest £ 100 FTSE 100 If you share with a yield of 3%, you expect dividend income of £ 3 a year. But if the yield is 6%, I’m looking at a prospect of £ 6 a year.
Dividends are not guaranteed. But if paid in the future, high-yielding stocks may be a good way for me to earn more from my holdings each year. Since we are currently investing £ 500, we have one 6% yield stock to buy in the hope of earning a dividend of £ 30 each year. With higher dividends, the £ 500 invested today could generate even higher returns in the next few years.
6% yield FTSE 100 shares
The share of the problem is Legal & General (LSE: LGEN)..
The company’s multi-colored umbrella logo is known to millions of people. In addition to providing insurance, venerable companies offer a variety of financial services products. It’s a lucrative business. After-tax profits declined last year, but were still £ 1.3 billion.
The company is good at using profits to fund dividends. Last year, we paid more than £ 1 billion in dividends to shareholders. Dividends are covered by profits and the current yield is 6.1%.
Legal & General dividends may continue to rise
The company has been increasing dividends as much as possible, although it has retreated significantly in the years following the last financial crisis.It made a plan Increase dividends annually for the next few years..
To do so, we need to carry out our business properly. Dividends can be reduced or canceled at any time. However, with its broad customer base, brand awareness and established financial expertise, we believe Legal & General’s earnings outlook remains strong. Also, the company does not rely on its glory. The current focus is “Comprehensive capitalismCan help attract a new generation of customers. One of the attributes I find attractive in the financial services industry is that attracting customers early in life often leads to repeated business for decades.
Legal and general stock price risk
Attractive yields may suggest that the city considers its share to be at high risk. Is this the case for Regal & General?
One of the risks the company faces is rising billing costs.As a rival insurance company Direct phone The increased cost of used cars, flagged yesterday, could lead to higher billing. This can undermine the interests of insurance companies such as Legal & General.
Next move on legal and general stock prices
I used to hold Legal & General in my portfolio. At the time of writing this article today, stock prices are higher than before, up from 25% a year ago.
Still, for the FTSE 100 stock, I find the 6% yield attractive. I will gladly buy it again for my portfolio.
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Christopher Luang does not have a position in any of the shares mentioned. The Motley Fool UK does not have a position in any of the listed shares. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by exploring different insights, Better investors than us.
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