Here’s why Legal & General share price soared to all-time high

Legal & General Group share price has been in a strong bull run and is now hovering near its all-time high. It has jumped in the last four consecutive months, bringing its market capitalization to over £20 billion. Will this surge continue as the company’s growth continues and dividend yield remains attractive?

Legal & General is a top income stock in the UK

L&G is a top British company that is beloved by investors because of its strong dividend payments and growth. It has a sweet dividend yield of about 7.8%, much higher than the FTSE 100 average of 3%. 

It is also higher than what UK bondholders are receiving annually. The yield means that a £10,000 investment in the company brings in £780 annually, excluding its stock return.

At the same time, its stock has done well, moving from 11p in 1996 to the current 273p. It has continued to outperform the benchmark FTSE 100 Index. 

Legal & General’s business has continued doing well in the past few years. Its most recent half-year results showed that its three businesses are thriving. The institutional retirement business continues attracting inflows as more companies move to third-party asset managers. Its workplace pension assets have soared to over £100 billion.

Similarly, its asset management and retail business continues doing well, a move that has led to higher revenues and profits. At the same time, it has moved to simplify its business by exiting some non-core markets. It recently sold its US insurance entity to Meiji Yasuda Life Insurance in a £2.3 billion deal paid in cash.

The most recent numbers showed that its core operating profit jumped by 6% in the first half of last year to over £859 million. This growth was driven by an 11% gain in institutional retirement and 3% gain in retail. It was offset by a 6% decline in the asset management segment.

The asset management business was impacted by the weakening US dollar and the market volatility. 

Looking ahead, the next major catalyst for the Legal & General share price is the upcoming earnings in March. The consensus estimates show that its institutional retirement’s operating profit will be £1.2 billion, while the asset management and retail will be £408 million and £445 million. Its core operating profit is expected to be £1.65 billion. 

LGEN share price analysis 

The weekly timeframe chart shows that the LGEN stock price has been in a strong bull run this year. It recently moved above the key resistance level at 260p, the highest swing in August last year, invalidating the double-top pattern.

Technical indicators suggest that the stock has more upside going forward. For example, it is being supported by the 50-week and 100-week Exponential Moving Averages (EMA)

The Average Directional Index (ADX) has jumped to 30, a sign that the bullish momentum is continuing. At the same time, the Relative Strength Index (RSI) has continued rising and is nearing the overbought level.

Therefore, the RSI and the ADX mean that the stock will continue rising ahead of its earnings report. The next key level to watch will be at 300p, which is up by 10% above the current level.