Legal & General (LSE:LGEN) has only limited exposure to the Middle East, but this hasn’t stopped its shares from slumping.

Over the last month, the FTSE 100 share has dropped 7.2% in value. It means a £5,000 investment made on 1 March would now be worth £4,640, a drop of £360.

Does this represent a tasty dip-buying opportunity? I think it may be, though it seems retail investors aren’t convinced. While Legal & General is the fourth-most-purchased stock with AJ Bell customers over the last week, it’s also the seventh-most-sold.

Rising risk…

As I say, Legal & General sources just a fraction of overall profits from the Middle East. There it has a modest asset management unit that works with sovereign wealth funds, pension funds and central banks.

Yet like the broader stock market, it still sank in value because of the Iran conflict. The impact on global inflation and interest rates could be considerable. The war could also create significant issues for economic growth.

For Legal & General, this could have wide-reaching consequences across the business. Demand for its life insurance, pension and investment pensions could slump as consumers feel the pinch. Falling financial markets would also drag on its assets under management and fees.

The financial services giant has remained resilient so far. Core operating profit rose 6% in 2025 thanks to strong pensions, protection and wealth products. Could the Iran war throw a massive spanner in the works?

… but long-term potential

It’s possible. But it doesn’t necessarily mean investors should avoid Legal & General shares like the plague. If you’re a long term investor, I think it remains a compelling stock to consider.

Make no mistake: the structural opportunities for the FTSE firm remain wholly intact. The world’s population is rapidly ageing, and people’s interest in financial planning (and especially in the West) is growing. It’s a combination I feel could supercharge demand for retirement and wealth products.

Legal & General’s pushing further into high-growth areas like asset management and bulk annuities, too — by 2028, it aims to write up to £65bn worth of UK pension risk transfer (PRT) business. The company’s also expanding its global reach through partnerships with other industry leaders to boost long-term earnings.

9.1% dividend yield

After its recent pullback, Legal & General has a 9.1% dividend yield at today’s share price. And with a cash-rich balance sheet, the firm’s in great shape to meet analysts’ payout estimates, even if earnings disappoint in 2026. Its Solvency II capital ratio remains well above double the regulatory minimum.

Meanwhile, the forward price-to-earnings (P/E) ratio sits at 8.1 times, below the 10-year average of 10-11. Given the company’s enormous (and growing) market opportunities, and work it’s carrying out to capitalise, I see this valuation as extremely attractive.

While not without risk, I think Legal & General shares demand serious consideration. But it’s not the only bargain stock that deserves a look.