A high-yield FTSE 100 stock I’d snap up to earn a second income

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Buying high-yield FTSE 100 shares is a tried-and-tested strategy used by many investors seeking to earn a second income.

The idea is to create a passive income stream in the form of cash dividends paid out by companies.

While the FTSE 100 index is home to many dividend stocks that could help me achieve this, I’ve got my eye on one in particular.

A company promoting inclusive capitalism

Legal & General (LSE:LGEN) is a British multinational financial services and asset management company.

The group’s products and services include investment management, lifetime mortgages, pensions, annuities and life assurance.

The company’s stated aim is to be one of the world’s largest asset managers and a leading provider of retirement and protection solutions.

Moreover, I admire the fact that the group prides itself on being a provider of inclusive capitalism. Put simply, this means investing capital for high return and the greatest social benefit.

A solid financial performance

In 2022, Legal & General delivered balanced and profitable growth across almost every division.

As a result, full-year operating profit rose 12% to £2.5bn with cash generation of £1.9bn up 14%.

Despite a solid financial performance, the company’s share price growth has been lacklustre and rather volatile in recent years.

However, it’s Legal & General’s generous dividend yield that I’m more focused on in my pursuit to earn a second income. Sitting at around 7.7%, its yield is among the highest in the FTSE 100 index.

More importantly to me, it also looks well covered at current levels. That’s thanks to the group’s strong cash and capital generation.

Unfavourable macroeconomic conditions

Nevertheless, there are challenges that Legal & General will have to navigate moving forward.

Not least among these is the return to a ‘high inflation, high interest rate’ economy. These factors taken together cause low economic growth.

While this is likely to impact consumer sentiment, I’m reassured by the group’s vast range of products and services, which are relevant across a range of economic scenarios in helping customers achieve financial security.

The war in Ukraine and wider geopolitical tensions also threaten to cause further disruption to global economic activity.

Nevertheless, over the last year, I think the group has proven itself capable of monitoring the impact from a range of geopolitical scenarios to ensure the group remains financially and operationally resilient amid unfavourable conditions.

A bright future outlook

Looking ahead, Legal & General expects continuing high volumes in the fast-growing global pension risk transfer market.

This includes in the UK, the US, Canada and the Netherlands, which I see as key markets that could be pivotal in driving growth for the company going forward.

What’s more, I’m confident the group can continue to capitalise on these growth opportunities and many more while remaining vigilant amid a fast-changing economic and market environment.

For this reason, if I had some spare cash lying around, I’d snap up Legal & General shares in a heartbeat as part of my strategy to earn a second income from high-yield UK shares.

The post A high-yield FTSE 100 stock I’d snap up to earn a second income appeared first on The Motley Fool UK.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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