Legal & General (LSE: LGEN) shares have had a disappointing five years. They’ve fallen 5.7% in the time, from 279p on 15 April 2021 to 263p today. That’s a poor showing over a fairly lengthy period. If an investor had put £5,000 into the shares five years ago, they’d be worth £4,715 today. That’s a capital loss of £285. 

Over the same timespan, the FTSE 100 as a whole climbed 51%. Which makes Legal & General look even worse. Yet there’s one consolation. Legal & General is a terrific dividend stock. Today, it boasts the highest trailing yield of the entire FTSE 100, at 8.3%. Does that compensate for that capital loss?

FTSE 100 dividend sums

Now let’s say our £5k investor ploughed every dividend they received back into Legal & General shares. What would they have now?

It’s a complex calculation, so I fed some figures into ChatGPT, and I hope it’s not having one of its regular hallucinations. But the chatbot reckons our investor would have £6,887. So despite the share price drop, they’re sitting on a total return of 38%. Which is a lot better, but still badly trails the FTSE 100 (which at a guess returned almost 70% with dividends reinvested).

So much for past performance. Is the FTSE 100 asset manager and insurer worth considering today?

The question has been on my mind for some time, since I added it to my Self-Invested Personal Pension three years ago. I was seduced by the high yield, and being honest, it’s underperformance too. Investing is often cyclical, and I hoped to bag the stock at a bargain price, then benefit when it swung back into favour.

The Legal & General share price is actually up 12.5% over the last year, so things are starting to look up. There’s a long way to go though.

Generous share buyback

It’s still making money. In full-year 2025, the board posted a 6% increase in core operating profits to £1.62bn. Sadly, that felt just short of expectations, with markets anticipating £1.65bn. It was still enough to fund a £1.2bn share buyback, the group’s biggest ever. In total, the board will return more than £5bn between 2025 and 2027. This suggests that big dividend is sustainable, although we can expect it to rise by just a modest 2% a year from here.

Management is still battling to tidy up a big sprawling business, while seeking out new growth opportunities. If the Iran crisis intensifies, and markets fall, that will hit Legal & General, which has £1.2trn of assets under management. The oil price spike looks set to keep interest rates higher for longer. That will hand investors a higher rate of income from risk-free asset classes such as cash and bonds.

I still think Legal & General is worth considering for income-focused investors. However, they should also check out FTSE 100 rival Aviva. It has a lower trailing yield at 6.2%, but its shares are up an impressive 55% over the last five years.