The Legal and General share price has rallied with the FTSE 100 in November, from lows of 177.5p to the current price of 260p. The company has also been boosted by a five-year plan set out on November 12th.
The index of the UK’s top 100 shares has risen by 16% in November but the price of LGEN has soared 46%. The company has been largely unaffected by the coronavirus and in the recent trading update, the group expects full-year 2020 operating profit to be in line with 2019’S £2.3bn.
The Legal & General share price benefits from the company paying one of the largest dividends and it was confirmed that the payout would remain flat in 2020 due to what management called a “pause year”. The goal of the five-year strategy is to increase this by a percentage in the “low to mid-single digits”.
The company said in its trading update that the goal was for cash and capital generation to exceed dividends, saying:
“We intend, in aggregate, to generate £8.0-9.0 billion both of cash and capital, and to dividend £5.6-5.9 billion”.
The company’s healthy financial position and the fact that it is still paying dividends will continue to underpin the shares going forward. Dividends have been a sore point for investors this year as many companies made significant cuts to shareholder payments or stopped them altogether.
L&G operates five strong businesses with “distinct competitive advantages” and their diversification in large markets has provided a good safety net for these uncertain times. The company was concerned about a slowdown in the U.K. housing market, while U.S. life insurance claims also increased due to the virus.
Legal & General Investment Management has performed well in the market volatility and has a diversified asset base with AUM at £1,234bn. Legal & General Insurance was also robust with written premiums in the UK and US reaching £1,47bn, up 5% on the prior year. The sale of its Mature Savings business will see another boost to capital of £325m this is expected to be highlighted in the full year results.
For the Legal and General share price, the target will be the 2020 highs at 320p. This is definitely a realistic target by Q1 2021 as the emergence of vaccine candidates to end the lockdowns, combine with a possible Brexit deal. The company has remained strong through the stormy weather of the coronavirus and once the market is in recovery mode, LGEN will still be outperforming its peers on dividend payments.
LGEN Technical Outlook
LGEN saw a low of 177.5 into November but a steep rally sees the share price at the 260p level. This is above the resistance at 254p and as long as the price remains above here then the path to February’s pre-crisis highs at 325p is clear. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
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