It's down 8%, so would I be a fool to ignore Legal & General's cheap share price?

It has not been a very good year Legal & General (LSE: LGEN). Its share price took an 8% hit in 2024. On the other hand, the FTSE 100 increased by 7.5%.

But since the stock went down this year, I've been paying close attention. In fact, I think now would be a wise time for me to consider buying some stocks. That's what I'm doing right now with my portfolio.

Growing yield

Another reason for that is because of the financial service stalwart's profit. A falling share price means a higher yield. As such, the stock currently has a whopping 9% payout.

That's the third highest in the FTSE 100. And it easily clears the benchmark yield index of 3.6%. What makes it even better is that its shares have been rising in recent years due to the actions of management.

Over the past decade, its payout has increased by more than 80%. Given that returns are never guaranteed, it's actions like these that fill me with confidence when targeting stocks for income.

We have also seen management emphasize rewarding shareholders in recent times. For example, the company is expected to complete its five-year dividend plan this year. During that time, it would have returned almost £6bn to shareholders through the scheme. This year, the board has indicated its intention to increase the dividend by 5%.

A bright future?

What I also like about Legal & General is that I think the firm is well positioned to capitalize on trends such as the UK's aging population. Over the next 25 years, forecasts have the number of over-85s in the UK doubling to 2.6m.

As people live longer, there will naturally be an increase in demand for retirement, wealth, and protection products. Legal & General will benefit greatly from this. It is already a leader in areas such as the pension risk transfer market.

Problems along the way

That said, while I see long-term value in Legal & General, it won't be a smooth ride for the business. Inflation and high interest rates remain a challenge. Although it may sound like we are out of the woods, economic uncertainty continues and threatens the company's performance.

For example, a delay in future cuts could damage investor confidence, which could see customers pull their money out of funds. Over the past few years, the business has seen its assets under management (AUM) improve. Most recently, we saw this in the first half of the year, when the total AUM of its asset management division fell by 3%.

A long-term vision

But as a long-term buy, I'm bullish on the FTSE 100 stalwart. Its shares look decently priced, trading at a forward-earnings ratio of just 9.1. Couple that with its meaty yield and future growth prospects, and I think Legal & General could be a smart buy. If I had money, I would buy cheap stocks today.