Legal & General Share Discussion Threads

[pj84] 15/2/2024 11:36:17

"Berenberg sees a smoother road ahead for L&G
Legal & General (LGEN) will enjoy a smoother ride from here given the growth prospects for UK pensions, says Berenberg.

Analyst Thomas Bateman reiterated his ‘buy’ recommendation and target price of 289p on the Citywire Elite Companies A-rated insurer, which gained 2%, or 4.6p, to 235p on Wednesday ahead of its full-year 2023 results, but still has some way to go to recover the 7% loss over the past year.

‘The road ahead for L&G is much smoother than what can be seen in its rear-view mirror,’ said Bateman.

‘We remain convinced that in a scenario where interest rates fall slowly in the UK, then the 8.8% 2024 dividend yield L&G currently offers is an extremely attractive investment proposition, especially given the strong growth prospects in UK pensions.’

Although there are some ‘frustrating accounting movements’ that will feature in the full-year results, he said they do not affect the cash generation of the business.

‘More importantly, longevity releases will drive solvency capital generation, assets under management in L&G’s asset management business is rising, corporate bond spreads are falling in the UK, and the demand for annuities remains exceptionally strong,’ he said."

[geckotheglorious] 15/2/2024 10:05:47

Legal & General (LGEN) will enjoy a smoother ride from here given the growth prospects for UK pensions, says Berenberg.

Analyst Thomas Bateman reiterated his ‘buy’ recommendation and target price of 289p on the Citywire Elite Companies A-rated insurer, which gained 2%, or 4.6p, to 235p on Wednesday ahead of its full-year 2023 results, but still has some way to go to recover the 7% loss over the past year.

‘The road ahead for L&G is much smoother than what can be seen in its rear-view mirror,’ said Bateman.

‘We remain convinced that in a scenario where interest rates fall slowly in the UK, then the 8.8% 2024 dividend yield L&G currently offers is an extremely attractive investment proposition, especially given the strong growth prospects in UK pensions.’

Although there are some ‘frustrating accounting movements’ that will feature in the full-year results, he said they do not affect the cash generation of the business.

‘More importantly, longevity releases will drive solvency capital generation, assets under management in L&G’s asset management business is rising, corporate bond spreads are falling in the UK, and the demand for annuities remains exceptionally strong,’ he said.

[fatherjack3] 15/2/2024 09:07:46

There is a fundamental reason why this excellent company is overlooked and unloved....Brexit. The only Brexit dividend I can see is the excellent dividend yields that income investors can lock in.

[tornado12] 15/2/2024 08:44:44

Breathtaking how the Eu stocks are so more advanced in value to the FTSE. I really don’t see a fundamental reason as Europe is suffering just as us and Germany even more so . The divi yields are not a reflection on the company investment risk, but a missing interest in owning Uk stocks .. hence the flight to NASDAQ

[tornado12] 15/2/2024 07:30:29

Looks like another good start to the ftse futures today after the positive news yesterday. Will this recover back to 245-250p mark before results ? I like to add in my new ISA but was hoping sub230p for that. The share price trend seems totally dependent on the monthly inflation and interest rate direction and timing of the reduction GLA

[skinny] 14/2/2024 12:26:17

Zac - that's a stupendous and consistent return - I hold plenty of funds, but can't come even close to that.

The thing with my LGEN investment is that timing obviously played a big part.

For comparison, I bought AV. in May 2010 @294p and sold half (due to the appreciation) a year later in May 2011 @445p.

I continue to hold the remainder and added a few last August for rounding purposes @377.

So whilst they've provided a steady dividend, had I held the lot for 14 years, the capital appreciation has been poor by comparison to LGEN.

[zac0_4] 14/2/2024 11:51:42

Skinny - well done. And well done continuing to hold over the years.

I'd like to apply some context to the figures regarding you getting back the value of your original investment every 4.5 years. This isn't intended to undermine your achievement, simply provide food for thought.

Before I go any further, I hold LGEN and intend to continue to hold within my ISA for many years.

However, my largest holding by far is in Fundsmith Equity Fund. The fund was launched in November 2010, so not a million miles from your 99p purchase date. As an example had you invested £10,000 on day 1 and, as you have done, simply held until now your investment would be worth £66,200. For every 15% increase in the fund price today your holding would be growing by the value of your initial investment.

Here's the key bit . . . it's average annual return, since inception, has been 15.4%. So, if that continues, and there's no guarantee, each year you continue to hold you're getting the value of your initial investment back in capital appreciation over that 12 month period. Good Luck.

[tornado12] 14/2/2024 11:22:30

I brought my first investment in JULY 2018 and invested every year since then.....Wished I brought them many years before, of course.........My compounded returns have arrived to 5 figures now and this accelerated my DIVI vs CAPEX break even date. You need to be patient with such approach and need a robust divi payer plus a little luck. My lowest purchase was 146p...

[keyno] 14/2/2024 11:12:05

Well done!

[skinny] 14/2/2024 10:58:38

99p in 2011.

[zac0_4] 14/2/2024 10:57:11

" . . . I recover my original capital outlay here in @4.5 years . . . "

Just out of dividends? What price did you buy at and when?

[skinny] 14/2/2024 10:40:24

Because I bought in at a fortuitous price and the increase in dividend size, I recover my original capital outlay here in @4.5 years.

[chiefbrody] 14/2/2024 09:45:20

If you bought in at 13% yield(or whatever it was) then it might not be too long.

[zac0_4] 14/2/2024 09:08:15

". . . at some point in next 5 years I will have recovered my capital invested . . ."

You must have bought some time ago as it takes a little longer than 5 years to recover your capital.

[tornado12] 14/2/2024 07:54:17

I agree Jonny, the game change is when inflation genie is back in the bottle and interest rates start to fall. I dont expect a negative impact on dividend policy even under these current conditions GLA

[jonnybig] 14/2/2024 07:47:41

Inflation will come crashing down in April when the energy price cap falls approximately 15% and commodities have high comparatives.

Then the likes of lgen and phnx should really start motoring. Those who have the balls to ignore the fear and doom will be laughing.

[tornado12] 14/2/2024 07:34:38

CPI for January is same as December, so at least not an increase. Seems opening prices see this favorable.
Just a comment on the strategy for growth or dividend. I am firmly in dividend camp here and for anyone invested in LGEN seems the most logical reason. I plan to hold for many many years, so at some point in next 5 years I will have recovered my capital invested, only based on the divi income & compounding. I believe is a matter of personal preference and risk.. GLA

[yump] 13/2/2024 23:06:45

You’re not comparing like with like, because the “yield” on the tracker depends on whether the market is bull, bear or flat overall.

If you’d bought an Indian tracker a year ago, you’d probably be beating even the current div yields in UK on the discounted income stocks.

2002-2010 would not look good at all compared to say 4% a year from a group of income stocks.

[zac0_4] 13/2/2024 22:21:53

vickiitwo2 - Around 40% of my portfolio is in managed global equity funds, 17% in global equity tracker funds and 10% in technology focussed funds & shares.

I'm amazed just how many people only invest in the UK when it accounts for around 4% of global gdp. And, also, how many people just focus on dividends as an only means of providing an income.

Whilst LGEN dividend yield looks attractive it has produced a 10 year annualised average return of 5.8% pa. Their global equity tracker fund, L&G International Index, has returned 12.7% pa over the same period!

[vickiitwo2] 13/2/2024 22:00:45

Me too zac, thankfully i moved out divi paying assets in the first years after brexit,
international growth stocks account for a larger portfolio proportion for me. A growing number of pension funds now do this. The UK is a basket case for investment. Id rather put spare cash into a cash isa, not that even that is safe in this country.

[zac0_4] 13/2/2024 21:35:18

" . . . Divi hunters beware, its a mugs game . . ."

I tend to agree. A couple of years ago dividend paying assets accounted for about 30% of my portfolio value. Following a period of selling and redistributing capital it's now down to just below 20%. I hold LGEN in my fund & share account, my ISA and my SIPP. I plan to sell both my fund & share account and SIPP holdings later this year which will reduce my exposure to around 17.5% by value.

Long (ish) term my aim is to get the value down to 15% or below.

I enjoy better returns from non-dividend paying holdings over the long term.

[vickiitwo2] 13/2/2024 20:29:32

There we are, Dow blinks and L&G plummets, losing all the benefit of any divi. Divi hunters beware, its a mugs game. Fundamentals count for nothing (if there were any in the first place). The US and random tweets on 'X' drive share prices on the basket case ftse.

[jubberjim] 13/2/2024 19:20:27

Looking for next gap down to 212/213 and will add again


It's a funny old game

[tornado12] 13/2/2024 18:02:17

I am expecting the UK CPI to be higher than fcst tomorrow. Have to be patient until results and top up in new ISA