Any stock that approaches double-digit yields tends to set off alarm bells in my head. More often than not, this is a pretty forceful signal that the dividend may be cut.

With that in mind, I wondered if it was true FTSE100 shares are a nightmare for unwary buyers. Or maybe this is actually an opportunity that cannot be missed?

Monster performance

The company in question is Legal and general information (LSE: LGEN). Right off the bat, its income-generating credentials look top-notch. As I write, the forecast dividend yield for the company’s shares in FY25 is 9%, making it the largest payer at the top end of the UK market. For perspective, a fund tracking the index would return about 3.2%.

Legal & General shares also look inexpensive, at least compared to the market as a whole. The price-to-earnings (P/E) ratio of 11 is lower than the FTSE 100 average, although it’s not a terrible bargain among financial sector companies.

Not fully covered

The problem is that current profitability is not expected to be covered by profits. This may explain why the £14 billion company’s share price has not risen so far in 2025. A gain of just 3% lags the index somewhat.

The mere lack of insurance does not necessarily mean that the contract is broken. Profits in every business are cyclical to some extent, and some businesses sometimes have to dip into cash reserves to fund full payment.

The most essential question to ask is whether this appears to be an ongoing problem. In this case, any enormous or unexpected decline in earnings could force management to maintain the full annual dividend or reach for the knife.

Well, this is where things get a bit complicated.

Dark clouds are gathering

It is uncontroversial to say that the UK economy is not operating at full capacity at the moment and many of us are still feeling the pressure of higher prices. Ultimately, this may lead to reduced demand for Legal & General products. More generally, the company can expect to see fees reduced if markets go through a hard period.

There is also the petite matter of the budget for the next month. Let’s just say that on November 26, no one expects there will be anything to sing about.

On the other hand, the fact that this company has had a hand in so many financial cakes, namely life insurance, pensions and asset management, may make it a safer bet. As a result, Legal & General’s has demonstrated its ability to cope with past economic crises and, despite having to halve its final dividend in 2008, has shown good form in increasing payouts since then.

A must-have purchase?

As a 40-year-old fool, I still want to grow my wealth over the next few decades. In other words, dividends are nice to receive (and reinvest), but they don’t matter.

However, I can see why someone who wants to prioritize getting cash from their investments might consider buying Legal & General stock as part of a diversified portfolio. This incredible performance is undeniably tempting, assuming you can maintain it.

But too good to ignore? This could be stretching. There are plenty of other dividend stocks on the UK market that I think look equally attractive.