Investors at Hargreaves Lansdown appear to be piling into FTSE 100 income stalwart Legal & General Group (LSE: LGEN).

According to Hargreaves, the life insurance and asset management group was its most frequently purchased share last week, accounting for 6.3% of all deals placed.

I’m already a Legal & General shareholder, but the company’s seemingly modest valuation and 9.5% dividend yield still look tempting to me.

Should I buy more stock for my portfolio? Let’s take a look.

How safe is the 9.5% yield?

Legal & General has been in business since 1836 and has more than £1trn of assets under management. The group’s dividend has only been cut once since 1987, in 2009.

In other words, this is not some upstart growth stock with an unproven track record. Legal & General has proven its commitment to paying dividends over many years.

Of course, none of this means that the dividend will remain safe. Dividends are never guaranteed and can always be cut.

In my experience, the most reliable way to assess the safety of a dividend is to check the accounts and see if the payout is covered by surplus cash generated by the business.

Crunching the numbers

When it comes to Legal & General accounts, there’s good news and bad news.

The bad news is that it’s pretty much impossible for a private investor like me to get a detailed understanding of every item that appears on its balance sheet. The business is simply too large and too complex.

The good news is that Legal & General provides clear and consistent data about cash generation in the business.

For example, last year’s results show the business generating £1.8bn of “operational surplus”. This dividend cost £1.2bn in 2023, so this shareholder payout was covered comfortably by cash generation.

In 2024, the half-year results showed surplus generation of £897m. Doubling this up gives me an estimated full-year value of £1.8bn – unchanged from last year.

My estimate is also consistent with the company’s own guidance for total surplus generation of £5bn-£6bn from 2025 through to 2027.

The dividend looks safe to me. But these numbers do highlight one possible concern.

Where’s the growth?

Legal & General’s share price performance has been fairly weak this year. As I write, the shares have fallen by 23p to 225p since the start of 2024.

Over the same period, the company has paid out 20.6p per share in dividends.

This means that dividends received by shareholders like me in 2024 have been cancelled out by the fall in the share price. In effect, the total return (share price + dividends) is below zero, despite a 9% dividend yield.

One explanation for this might be that the market is pricing Legal & General as an ex-growth business. In other words, it could be in slow-motion decline.

I can’t ignore this risk. But on balance, I think it’s probably unfair.

While some of the group’s pension business will naturally tail off, the company is continuing to sign up new retirement customers and expand its asset management operations.

Legal & General is already one of the larger positions in my dividend portfolio. I’ve probably got enough shares for now. But if I wasn’t already invested, I would certainly be happy to buy at current levels.