Legal & General results were boring, but investors will appreciate that in the current climate.
The big attraction for investors is the Legal & General dividend. Although there was some disappointment at the outcome of a recent capital markets day when the company outlined tepid dividend increases in the coming years, the company yields in the region of 9%, and there’s nothing in today’s report to suggest that it is under threat.
L&G’s key profitability metrics showed marginal signs of improvement in the first half and were nothing to get excited about. Investors have had enough excitement for one week already, and the reassuring update sent shares 0.5% higher on Wednesday.
Core operating profit for the period rose to £849m from £844m in the same period last year. EPS rose to 10.58p from 10.52p. Boring yet reassuring.
“Legal & General has inched over the line of beating consensus by 1% in a very steady if not uneventful set of results,” said Adam Vettese, Market Analyst at eToro.
“They expect growth to continue in the mid-single digits, have increased their dividend and announced a £200m share buyback. Arguably this is exactly the kind of news investors want to hear after the week they have had given the recent global sell-off.
“A fall in AUM was offset by a huge uptake in individual annuities. These products pay a fixed income in retirement for life and have proved more attractive in this higher interest rate environment.
“L&G also noted that macro conditions do represent a risk to their performance and are not immune from any volatility as some recession fears or at least fears of a ‘hard landing’ may have crept in over the last week. The firm’s construction arm has started to see the benefit of supply chain and inflation pressure easing, which should continue as the year goes on.”
The interim dividend increased 5%. Legal & General at these prices is one to tuck away and forget about.