Are legal and general actions illuminating me?

I have fallen in love with the charms of Legal and general (LSE: LGEN) Actions. I bought them in 2023 because they looked like a brilliant income game, with some growth prospects a little later. Now I have doubts.

With an impressive dividend yield of 8.3%, it is easy to see the appeal for income applicants.

However, with the price of reduced action 1.4% in the last year and a strong 17% for five years, a significant part of these dividends has been eliminated by capital losses. Is this a case of a step forward, two steps back?

Is the FTSE 100 stock manipulating me?

A red flag is its price to profit ratio (p/e), which is currently in a steep 32 after a recent drop in profits. That is an increase in the eyebrow. Legal & General quoted only six times profits when I bought it in 2023. At that time it looked like a bargain. I'm not sure it was.

I worry that they have enlightened me to believe that this is a bargain, just to end up paying too much for a business that is struggling to grow.

In December, the company published a positive set of results that offered some peace of mind. The Board said it was on its way to reaching its guide for the growth of medium digit digits in operational profits throughout the year 2024.

With accumulated solvency forecast II, capital generation of £ 5 billion- £ 6 billion between 2025 and 2027, the dividend was well financed.

Investors welcomed these figures, and the shares have recovered 7% in the last three months, to be fair. However, recovery has doubted.

The price of legal and general actions obtained another elevator on February 7, when the CEO António Simões announced the sale of the United States protection business to the Japanese pair Yoshida in an agreement of $ 2.3 billion.

Meiji Yasuda will take a legal & general participation, which Simões acclaimed as a “Transforming transaction”. Again, the actions jumped. Again, it did not last. They have returned to their usual margins.

Is the dividend enough?

There is a significant opportunity ahead. As interest rates fall, the high performance of legal and general could be even more attractive.

The lowest rates tend to increase financial actions by making their debt obligations more manageable and increasing the value of their investment portfolios. In theory, this should help the company recover the impulse.

However, there are two problems. First, interest rates of the United Kingdom have been reduced three times with little impact on the price of shares.

Second, there is no guarantee that they are cut much more, at least in the short term, as inflation increases.

Legal & General may not be a classic value trap, but it is not a clear income game either. The action is in a frustrating middle term, offering high dividends but little on the path of capital appreciation. For comfortable investors with that compensation, it can still be a worthy addition to a portfolio.

I love getting my dividends and I will not sell. MORE LEGAL AND GENERAL GAS LIGHT? Probably. But so far I have about 20%, despite the minimum action of the price of shares. I will treat any growth as a bonus. And continue questioning my sanity.