Legal & General investors booked profits on Wednesday as the company confirmed positive results for 2022 which included a 12% jump in operating profit and a 5% dividend hike to 19.37p.
Legal & General shares were 2% lower on Wednesday after the company’s shares yesterday touched the highest level since the Liz Truss Gilt debacle last year.
L&G shares are roughly 30% higher from the intraday lows recorded in October 2022.
Their higher group operating profit pays testament to L&G’s risk management as they successfully navigated the mini-budget gilt market volatility without suffering a significant level of disruption to their investment business. Legal & General Investment Management operating profit slipped 19% to £340m and Assets under management also fell.
Despite weakness in the investment management business, Legal & General’s cash generation rose 14% to £1.9bn.
“The outlook for the group looks positive, regardless of the impact of last year’s bond market rout. The group are bringing in new assets at pace and pension funds are increasingly looking to L&G to assume their liabilities in exchange for substantial premiums. The group’s Capital business is growing strongly and has maintained asset quality at high levels to date,” said Steve Clayton, Head of Equity Funds at Hargreaves Lansdown.
“The dividend is set to rise 5% this year and next, in line with the group’s stated policy. That puts L&G onto a yield of approaching 7.8%. It is rare to find businesses that can sustain that level of dividend pay-out, but in L&G’s case, the dividend is well covered by earnings and capital generation.”