The Legal & General dividend yield of 7.6% is now the highest trailing yield on the FTSE 100, making the insurer and asset manager an alternative worth examining as the government prepares to restrict Cash ISA allowances from April 2027.
The Treasury’s plan, confirmed at Autumn Budget 2025, will cut the annual Cash ISA limit for under-65s from £20,000 to £12,000, while the Stocks and Shares ISA allowance stays at £20,000 for all age groups, according to a UK Parliament Treasury Committee report. The policy change is intended to steer long-term savers toward equity markets.
Cash ISA versus equity returns: the long-run gap
The numbers behind that policy decision are stark. Over the past decade, the average Cash ISA paid 1.21% a year, against an average annual return of 9.64% from a Stocks and Shares ISA with dividends reinvested, according to financial website Unbiased.
Over a one-year period the gap is modest: £20,000 grows to £20,242 in cash versus £21,928 in equities. Stretch that to 30 years, however, and the same £20,000 turns into £28,690 in a Cash ISA and £316,301 in the average Stocks and Shares ISA. Short-term equity volatility is the price for that long-run compounding.
Legal & General dividend policy and recent results
Legal & General Group (LSE: LGEN) sits at the top of the FTSE 100 yield table on that 7.6% trailing figure. The Legal & General dividend has grown at an average of 10.7% a year over the past 15 years, though that track record carries no guarantee of continuation.
The company’s formal policy, published on its retail shareholder dividend page, targets 5% dividend per share growth for full year 2024 and 2% per annum thereafter, with a series of share buybacks planned across 2024 to 2027.
Results for the full year 2025, reported on 11 March 2026, showed Institutional Retirement operating profit of £1,168m, up from £1,097m the prior year. Total new business gross premiums reached £11,822m, against £10,326m in FY 2024, and annuity assets grew to £74.9bn from £66.6bn, according to the L&G FY 2025 results press release.
The same announcement disclosed a £1.2bn share buyback, described as the largest in the company’s history. Combined with guided dividend per share growth of 2% for 2025, planned returns to shareholders reach £2.4bn over the next year, L&G said in its full-year results RNS. Workplace DC assets under administration rose 21% to £114bn, with net flows of £6.2bn.
The L&G Annual Report and Accounts 2025 sets a target all-in yield of 17% over the next 12 months and outlines plans to return more than £5bn to shareholders over 2025 to 2027. The company describes itself as the largest UK asset manager in the defined contribution market, with approximately 25% market share and more than £200bn AUM in that segment.
Total group AUM stood at £1.1 trillion at year-end 2024, per the company’s equity investor and analyst centre.
Share price recovery and the risks ahead
LGEN shares have traded at roughly the same level as a decade ago, a run that has frustrated holders. Over the past year, though, the shares have gained 12.7%, bringing the total one-year return above 20% when combined with the trailing yield.
The risks are real. Legal & General operates in competitive institutional and retail markets, and a broad equity market downturn could reduce fee income from the assets it manages. Dividend growth also depends on continued cash generation; the 10.7% historical average is not a contractual commitment.
For investors who reinvest the Legal & General dividend during their working years and draw it as income in retirement, the compounding effect is the central attraction. The ISA reform note from Thomson Reuters Practical Law confirms the April 2027 implementation date, giving savers roughly a year to review the split between cash and equity holdings before the reduced Cash ISA limit takes effect.
The binary setup heading into FY 2026 results is straightforward: if L&G sustains its buyback pace and annuity book growth, the 7.6% yield becomes a floor rather than a ceiling on total return. If institutional flows slow or markets fall sharply, the share price recovery stalls and income does the heavy lifting alone.
