Legal & General Dividend Income Offers a Credible Route to a Second Income

Legal & General dividend income has quietly done what most side hustles promise and few deliver: a total return of around 65% over five years when dividends are included, equating to an annualised 10.53% per year. That is the context investors should hold in mind when weighing up dividend shares as a vehicle for building a secondary income stream.

Why Dividend Investing Can Beat the Side-Hustle Trap

The appeal of passive income is real, but most schemes that advertise themselves as such are neither passive nor reliable. Rental property demands capital, management and luck with tenants. Online content businesses take years to monetise and most never do. Stock market investing, by contrast, asks for regular monthly contributions, patience, and a willingness to leave capital alone.

The standard objection is risk. Equity markets do fall, and investors can lose money. But the history of committed, long-horizon investors is considerably more reassuring than the cautionary tales attached to short-term speculative trading. A ten-to-twenty year time frame, combined with sensible diversification, has consistently produced positive real returns for most participants. Even the rougher comparison: many small businesses take up to five years to turn a profit, and the majority never do.

A straightforward portfolio for someone starting out might combine income stocks for yield, growth stocks to compound the pot faster, and some defensive exposure to smooth volatility. Reinvesting dividends into additional shares rather than taking cash accelerates the compounding effect materially.

Legal & General Dividend Income: What the Numbers Show

Legal & General is the reference case that income investors in the UK return to repeatedly, and the dividend history justifies the attention. The total dividend per share rose from 17.57p in 2020 to 21.36p in 2024, with the 2025 figure reaching 21.79p. The progression has been steady rather than spectacular, which is generally what you want from an income holding.

At its June 2024 Capital Markets Event, the Board formalised that trajectory: a 5% increase in the dividend per share for full year 2024, followed by 2% annual growth thereafter. Alongside that, the company announced a £200m share buyback in 2024, with further similar buybacks planned through to 2027 as an additional channel for returning capital to shareholders.

The FY2024 full-year results, released 12 March 2025, showed core operating profit up 6% alongside a £500m buyback announcement. CEO António Simões described 2024 as ‘a year of significant strategic progress and strong financial performance. We delivered 6% growth in our core operating profit and core EPS, alongside excellent new business volumes, while investing for the future.’

The operational picture has continued to develop. According to the company’s 2024 annual report summary, the Institutional Retirement division wrote more than £10 billion of pension risk transfer deals globally in 2024, with record performance in the US and Canada. The company identifies a £1 trillion global market opportunity in this segment over the next decade. Retail annuity sales hit £2 billion in 2024, also a record.

More recently, Legal & General’s reporting hub flagged that its 2026 half-year results delivered 11% core operating earnings per share growth, with the company describing itself as ‘simpler, more focused.’

The yield on the shares has historically sat in a 7%–9% range, supported by recurring fee-based revenues across pensions, insurance, retirement planning and asset management. That breadth of exposure is what underpins the consistency: no single product line carries the dividend.

Source: Legal & General dividend page, adjusted for the 1999 share split and 2002 rights issue bonus element.

Risks That Still Apply

None of this makes Legal & General risk-free. Volatile markets, shifting capital requirements, regulatory change, and weaker operating periods have all pressured profits in the past. Dividends tend to be the first casualty when earnings slip. The 2025 annual report summary also showed the Solvency II coverage ratio at 203%, down from 232% in 2024, a metric that solvency-focused investors will watch. The share price, taken in isolation, is up only 15% over five years, which reflects how much of the return has been carried by income rather than capital appreciation.

The broader point about second-income investing is that no single stock should carry the load. Legal & General belongs in a diversified mix alongside growth names and defensive holdings. The income it generates, reinvested consistently over a decade, compounds in a way that most alternative income schemes cannot match without considerably more effort and risk.

The next test for the thesis is whether that 2% annual dividend growth commitment, combined with the buyback programme, holds through a period of tighter capital conditions. The H1 2026 EPS print suggests, at least for now, that it is.