Legal & General's (LSE: LGEN) share price has taken a hit, dropping by over 6% in a single day. This has led some investors to wonder if it's time to buy in, especially given the increased dividend yield of 9%. However, a closer look at the company's 2025 results reveals a more complex picture. While the insurer's full-year results weren't terrible, there were some weak spots that investors should be aware of. The core operating profit came in slightly below estimates, and the Solvency II coverage ratio fell, indicating a potential decline in financial health. The dividend payout is also a concern, as earnings are no longer covering the payments, suggesting that the yield may not be sustainable. Despite these issues, the company's long-term growth prospects remain promising, particularly with rising demand for long-term investments and retirement income. However, investors should be cautious, as there are several risks to consider. A dividend cut could impact the share price, and a stock market meltdown could compromise the company's earnings. Additionally, the private markets side of the business may pose risks, such as loan defaults or investor redemptions. Given these concerns, I would not recommend loading up on this stock. Position sizing will be crucial, and investors should carefully weigh the risks and rewards before making any decisions. In my opinion, while the current share price and dividend yield may be attractive, the potential for a dividend cut and the risks associated with the private markets side of the business make it a stock to approach with caution. The company's long-term growth prospects are promising, but investors should be aware of the potential pitfalls and consider alternative investments that offer a more balanced risk-reward profile.
