![\"Passive](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/04\/5a30edab9e412885b231118caa198f95.jpeg\")
Image source: Getty Images <\/p>\n Image source: Getty Images <\/p>\n
With so many dividend stocks listed on the London Stock Exchange, we\u2019re spoilt for choice. But one company that investors across the country are seemingly rushing to buy is Legal & General (LSE:LGEN).<\/p>\n
The life insurance and asset management business has a long track record of rewarding shareholders with dividends. In fact, when excluding the pandemic, Legal & General has raised shareholder payouts every year since 2010. And this trend has translated into the business having the highest yield in the entire FTSE 100 today at 8.6%.<\/p>\n
With that in mind, it\u2019s no wonder many investors see it as a top stock to buy. But I\u2019ve spotted something that makes me nervous\u2026<\/p>\n
Looking at the UK\u2019s demographics, there\u2019s an enormous incoming wave of retiring baby boomers, many of whom will soon be seeking pension and retirement solutions. And as interest rates steadily fall alongside inflation over the long run, the group\u2019s asset management arm looks also primed to thrive, riding the tailwinds of rising equity valuations.<\/p>\n
Of course, Legal & General isn\u2019t the only business aiming to cash in on these potentially enormous tailwinds. However, one major advantage versus many of its peers is the group\u2019s international exposure.<\/p>\n
With its presence in the US as well as UK markets, the business is able to tap into multiple market opportunities to maximise its growth. And with that in mind, it\u2019s not hard to understand why some investors see Legal & General as a mispriced quality compounder.<\/p>\n
But this is where things get complicated\u2026<\/p>\n
While the group delivered a robust 9% expansion of core operating earnings in 2025, this growth was still insufficient to close the gap between profits generated and dividends paid.<\/p>\n
Management\u2019s internal forecasts suggest this is only a temporary problem, with dividend coverage being restored by 2027. But there are two primary issues with this projection:<\/p>\n
It assumes that the market doesn\u2019t suffer a major downturn.<\/p>\n
It assumes that competition doesn\u2019t eat away at profit margins.<\/p>\n
Following the outbreak of war in Iran, the OECD has warned the UK is at risk of a major economic hit on the back of skyrocketing energy prices. And even in the US, economists and institutional analysts have increased their estimated odds of a potential recession.<\/p>\n
Admittedly, this is a worst-case scenario. But even if the UK and US economies manage to avoid disaster, there\u2019s still the question of rising competition.<\/p>\n
With multiple insurance groups looking to cash in on the ongoing annuities gravy train, Legal & General is having to price more competitively, pressuring its profit margins to capture volume. And if competition continues to intensify, management could end up falling short of its targets.<\/p>\n
That\u2019s why multiple institutional analysts have started flagging Legal & General\u2019s dividend as at risk of a cut.<\/p>\n
If management is able to hit its promised performance targets, Legal & General shares are likely undervalued today. But given the macroeconomic backdrop, that\u2019s a big if. And the risk of a payout cut is very real.<\/p>\n
That\u2019s why, despite its popularity, I\u2019m not in a hurry to buy the shares today. Instead, I\u2019m looking at other promising dividend stocks that offer a far more attractive risk-to-reward ratio.<\/p>\n
The post 1 no-brainer dividend stock to buy for lifelong passive income?<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/p>\n Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images With so many dividend stocks listed on the London Stock Exchange, we\u2019re spoilt for…\n","protected":false},"author":2,"featured_media":12162,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[274,5763,321,5,6],"class_list":{"0":"post-12161","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"tag-dividend-stocks","9":"tag-legal-general","10":"tag-london-stock-exchange","11":"tag-uk","12":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116390823362155441","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/12161","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=12161"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/12161\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/12162"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=12161"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=12161"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=12161"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}