189 Years Old, 9% Yield — Still Buyable?
Legal and General as an income investment
For a 9% yield without venturing into excessive risk, exotic assets, or volatile emerging markets, Legal & General deserves a close look. This blue-chip company, with a nearly two-century history, offers a yield well above the FTSE 100 average. Its long and predictable cash flows are derived from stable sources like pensions and annuities, backed by one of Europe's asset management giants. For income investors, the critical question shifts from generosity to sustainability: is this a genuine opportunity or a dividend trap? Here’s why, in my opinion, Legal & General’s strategic dividend appears to be the former.
Source: LG America
I/ A good long term business
A/ Soon a 200 year old lady
Legal & General was founded in 1836 in London by a group of lawyers under the name New Law Life Assurance Society, before soon becoming the Legal & General Life Assurance Society. Initially focused on serving legal professionals, the company quickly expanded its services to the wider public. Over the 19th and 20th centuries, it grew into a major player in life insurance, pensions, and financial services in the UK. Today, Legal & General is one of the country’s leading asset managers, with significant investments in pensions, real estate, and infrastructure. It continues to play a key role in promoting responsible finance and long-term investment. But a long history isn’t enough — what really matters today is how Legal & General makes money.
Source: Legal and General
B/ A Three-Pillar Business Model
Far from being a traditional insurer, the group now operates as a comprehensive financial platform, structured around three complementary engines that generate predictable cash flows.
Pillar 1: Retirement solutions
A company that must pay pensions over several decades can transfer this burden to Legal & General (L&G). In exchange for a premium, the group takes on these pension obligations and invests the funds in long-term assets—government bonds, loans to solid corporations, infrastructure projects—that generate steady income. This pension de-risking mechanism creates a close match between inflows and outflows, ensuring payment stability.
This activity, known as Retirement & Institutional Solutions, is at the core of L&G’s model. In 2023, the UK pension risk transfer market reached around £50 billion of liabilities, of which L&G managed £12 billion (nearly a quarter of the market). In 2024, the group signed a further £10 billion in new deals. Its total annuity portfolio stood at £86 billion at the end of 2023, a clear sign of corporate confidence in its strength.
This pillar is built on very long-term contracts, supported by structural trends such as an ageing population, corporate balance sheet pressures, and infrastructure needs. It highlights L&G’s ability to transform complex obligations into reliable and predictable cash flows, while channeling capital into the real economy. This pillar offers reliable income. If pensions provide stability, asset management brings scalability.
Source: https://group.legalandgeneral.com/en/about-us/our-strategy
Pillar 2 : Investment management
Legal & General Investment Management (LGIM) is one of Europe’s largest asset managers with more than £1.1 trillion in assets under management. Unlike traditional insurance activities, asset management is a capital-light business, generating recurring fees without requiring significant capital commitments. This makes it an important source of stable cash flow for the group.
LGIM’s strength lies first in its scale and client base. The majority of its mandates come from pension funds and institutional investors, whose long-term investment horizons translate into stable and sticky revenues. At the same time, LGIM has successfully diversified its offering beyond conventional equity and bond funds. It is active in passive index strategies, ESG-focused investments, real assets, and liability-driven investment (LDI), which directly supports pension schemes in aligning their assets with future obligations.
Thanks to this diversification and its institutional focus, LGIM has proven to be a resilient source of earnings, relatively insulated from market volatility. It acts as Legal & General’s capital-light growth engine, providing predictable and scalable income that balances the long-term commitments of the retirement business. Finally, beyond institutions, L&G also serves millions of everyday households — its Retail arm.
Unlock the Performance History & Investment Rationale
We’ve established Legal & General’s predictable business model and its 9% yield. But what does the stock’s 189-year history tell us about dividend safety?
The remainder of this deep-dive is hosted on our main platform, where we analyze the total return and, most importantly, show why this British stock is a perfect fit for your global income portfolio.
In the full article, you will discover:
The Brutal Truth: Why a 12.5% annual return over 15 years makes L&G a wealth compounder, but the 2008 dividend cut means it’s not a “rock-solid” dividend aristocrat.
The Strategic Fit: A detailed breakdown of the I-CASH analysis that justifies adding UK exposure and 9% yield.
My Final Decision: Why I am opening a position now and plan to fund it with upcoming dividends to build a long-term position.
To see the full historical performance and my rationale for adding L&G to a global high-yield portfolio, click the button below to read the complete article on our website:
Liked this Deep-Dive? Buy Me a Coffee!
Your support keeps this newsletter independent and research-driven. If this analysis saved you time or gave you a new investment idea, consider making a one-time donation. Every contribution helps me maintain part of the research free and accessible to everyone.
Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.