With a forecast dividend yield of 8.27%, Legal & General (LSE: LGEN) shares are expected to pay out a bigger percentage than any other stock on the FTSE 100. This is no flash in the pan either. The firm has consistently been one of the standout dividend stocks across the entire London Stock Exchange.

But savvy investors know there is more to investing than a few pretty numbers. How well is the dividend covered? What is the long-term track record? What kind of cash returns does the stock pay over long periods? These are the questions to answer if we want to determine whether this is the FTSE 100’s best dividend.

Dividend focus

It’s worth starting with a look at the share price, which has seen only a modest rise in the last 10 years. A share price of 208p in 2016 has only risen by 30% to the current value of 270p. These smallish returns suggest that, unless something drastic changes, this is a stock primarily for the dividends.

On the plus side, this isn’t just the biggest FTSE 100 dividend going, it’s on the up too. Even with the pause in increases during the pandemic, the overall payments are up by around 50% in the last decade. If this growth continues then an effective yield would grow to around 12% – and much higher if the dividends are reinvested.

What about the dividend cover? This is how much the current payments are covered by earnings. Below one means the company can’t afford the dividend based on current profits, whereas above two is seen as a very strong ratio. The current cover of 1.8 times earnings is therefore a good sign.

Stability

Of course, all this talk of dividends and earnings is underpinned by the business itself. A thriving company is what supports those payments and investing wisely is the key to getting above average returns, whatever the dividend is doing.

Legal & General is in the business of insurance and wealth management. What that means is very stable revenues. Folks don’t tend to cancel their life insurance. And looking after people’s money generally means a small but reliable cut.

This brings the negative of not being dynamic and having little room for growth. This kind of company is unlikely to be a ’10-bagger’ – a stock that increases ten times in value. Some investors may not like that lack of potential.

But in the event of some market turbulence, this kind of stability has advantages too. The stock bounced back strongly in 2008 and 2020 – two of the worst crises this century. If another shock comes along in the near future – perhaps by way of the madness going on in AI spending – then Legal & General could be one of the safest options. I think it’s worth considering.