Legal & General (LSE:LGEN) shares are remarkably unchanged over the past decade. Yes, there have been ups and downs in between. However, £10,000 invested a decade ago would only be worth £10,000 today. The share count has largely remained consistent meaning the value of the business is roughly unchanged.

Of course, the shares aren’t known for their appreciation. Instead the stock is known for its dividends. In fact, over the past decade, including this year, investors would have received £7,300.

In turn, that works out as a 73% return over the period, albeit with this year’s dividends included. That’s not a bad return. Definitely better than putting money into a savings account.

What’s more, the total returns would be a lot higher if we assumed that every dividend was reinvested. In fact, accounting for reinvestment, this final figure could reach closer to £20,000.

What analysts say

Analysts are currently split on the FTSE 100 stock, with the mean consensus rating at Hold from 14 analysts. There are currently three Buy recommendations, one Outperform rating, eight Holds, two Underperforms, no Sells.

The average share price target — where analysts think they see fair value — is just 5.8% above the current share price. And price targets range from £2 (19% below) to £3.35 (35% above), reflecting some uncertainty in the outlook.

The investment case is driven by resilient dividends, solid cash flow, and cautious optimism about earnings growth, but dividend cover is viewed as only just sufficient in the near term.

What’s the investment case?

Legal & General’s investment case is grounded in its diverse expertise across asset management, institutional retirement, and retail businesses, aiming for long-term sustainable growth.

The firm leverages its scale and integration of Legal & General Investment Management (LGIM) with its asset origination strengths (where it gets the funds from) to provide investment solutions across public and private markets.

To put that in simple terms, the business receives money from customers including those saving for their pensions, and invests that money across its diverse portfolio. This investment strategy aims to generate returns that can support paying out pensions and other related benefits. 

The company invests across stocks, bonds, real assets, liability-driven investments, and private markets such as real estate and infrastructure. This diversified approach supports sustainable returns and aligns with changing client needs, particularly pensions and retirement income solutions.

The bottom line

Risks are varied and reflect its broad exposure to global markets. This includes credit risks from bond defaults, while operational risks could include liquidity risks related to mismatched asset maturities.

I’ve been considering adding Legal & General back into my portfolio for some time, however I’m probably going to hold off for now. One reason is my concerns about UK government debt (Gilts). There’s definitely elevated risk around Gilts right now, and the last time bond yields spiked, some pension schemes were forced to sell assets to meet collateral demands to shore up derivatives positions.

I’d suggest Legal & General is one to watch, but it may be worthwhile to consider sitting on the sidelines for now.