Stock market

I think the legal and general share price is one of the biggest bargains on the FTSE.

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I’m considering. FTSE 100 And FTSE 250and with a share price of 252.2p, Legal and General (LSE: LGEN) stands out for me.

Both indices have rallied this year, however, asset management specialists seem to have missed out on those gains. To date, it has grown by just 1.5 percent.

But I don’t see it as a problem. In fact, I see this as an opportunity to pick up some undervalued stocks. If I didn’t already own some of his shares I would rush to buy them. I think investors should consider buying the stock today.

Value

Today there are many reasons regarding legal and general. One is its diagnosis. There are a few ways I can measure this, but I like to focus on its price-to-earnings (P/E) ratio.

Its forward P/E is 9.8. This is below his long-term historical average of 15 as well as the Footsie average of 11. This indicates to me that there is value in the stock today.

Passive income

Along with its cheap valuation, there’s another big draw: its 8.1% dividend yield. This is higher than the average of its Footsie peers (3.9%). Also impressive is that its payout has increased by over 80% in the last decade.

What I want to see is that the business has recently committed to returning more value to shareholders. We have seen this with its overall dividend plan, which is due to expire this year.

Management plans to increase production by 5% for the current year. This puts its forward yield at 8.7%.

My kind of shopping

When I’m researching which stocks to add to my portfolio, I look for a few criteria.

The first is the track record of growing dividends, which is evident at Legal & General. Next is a strong balance sheet. With a Solvency II ratio of 224% for 2023, an 8% jump from 2022, Legal and General also ticks that box.

A strong balance sheet allows it to focus on investing for future growth. Thus, analysts forecast the firm to grow earnings at an annualized rate of 22.9% through the end of 2026.

Risks

That said, due to the current economic climate, the business has faced many problems in the past few years.

Rising inflation and high interest rates, and the uncertainty they create, have seen legal and general share prices hit at times over the past few years.

In recent times, operating profit has taken a hit. In addition, businesses have seen their assets under management as investors withdraw their money from the funds. We’re not out of the woods yet, so I’d expect more volatility going forward.

A steal?

But at its current price, I think Legal & General could be a smart buy for long-term investors and it looks to be one of the best bargains on the FTSE, in my opinion.

While I expect some more volatility this year and next, I think the stock has plenty of room to return handsome dividends to shareholders over the long term.

I will hold onto my shares and with the passive income from its sweet yield, I will reinvest it into buying more undervalued shares.


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