Legal & General unveils dividend hike and £500m share buyback
- It has committed to return £5bn to shareholders within three years
Legal & General unveiled a dividend hike and a £500million share buyback on Wednesday.
The financial services group reaffirmed its commitment to return more than £5billion to shareholders within three years.
The scale of the group's buyback was larger than many analysts expected, with figures below £400million having generally been forecast.
In its latest annual results, the FTSE 100-listed asset manager's profits for the year came in slightly below forecasts.
Core operating profit reached £1.6billion, while pre-tax profit under IFRS accounting standards stood at £542million.
The dividend for shareholders was increased by 5 per cent to 21.36p.
Update: Legal & General unveiled a dividend hike and a £500m share buyback on Wednesday
Across its retail operations, the group revealed record annuity sales of £2.1billion and continued expansion in workplace defined contribution pensions. Core operating profit in the division jumped 12 per cent to £504million.
Legal & General Asset Management recorded total global assets under management of £1.1trillion.
The group said higher fee margin products and a strategic investment in US real estate equity specialist, Taurus helped boost margins, but the division's core operating profit fell 10 per cent to £400million.
Last year, Legal & General sold its homebuilding business, Cala Homes, for £1.35billion and its US Protection business for £1.8billion.
During the period, the firm also entered into a strategic partnership with Japanese life insurance company Meiji Yasuda.
Its Solvency II capital generation reached £1.8billion, while its Solvency coverage ratio increased to 232 per cent.
António Simões, chief executive of Legal & General, said: '2024 has been a year of significant strategic progress and strong financial performance.
'We delivered 6 per cent growth in our core operating profit and core EPS, alongside excellent new business volumes, while investing for the future.'
He added: 'By sharpening our focus and simplifying our portfolio - through the sale of Cala and US Protection - alongside our strategic partnership with Meiji Yasuda and our investment in Taurus, we are strengthening our ability to generate sustainable growth in our core businesses: Institutional Retirement, Asset Management and UK Retail.
'We stated at our Capital Markets Event that we intended to return more to shareholders and that is exactly what we are doing.'
Looking ahead, the group said it had a 'busy' pipeline in its pensions transfer arm.
Richard Hunter, head of markets at Interactive Investor, said: 'Legal & General is in the midst of a new chapter and is transforming, although given the nature of a business entrenched in investment, it is one which is viewed through the prism of the longer term.
'In line with its announced growth target, the increase to the dividend lifts the projected yield to a punchy 8.7 per cent, paying investors handsomely to wait as the strategy unfolds.'
He added: 'There is little doubt as to the longer-term potential for the savings and investment market, especially given ageing demographics and likely welfare reform.
'For L&G, an ability to participate in this market on a number of fronts, particularly the annuity and international angles should provide ongoing areas of growth.'
Legal & General shares were down 0.82 per cent or 2.00p to 242.90p on Wednesday.
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