It’s strenuous to name the most popular dividend stocks in the UK. However, if we look for those most frequently purchased on investment platforms, it looks like this Legal and general (LSE: LGEN) is leading the way.

With a forecast dividend rate of 8% – the highest on the market FTSE100 right now – it’s uncomplicated to see why. But there has to be more to it than just that.

Performance isn’t everything

For investors looking for passive income from dividend stocks, chasing the highest yield and ignoring everything else can be a mistake. Does Legal & General have enough behind it to support this dividend? Here’s what it offers…

• Forecasted dividend rate of 8%
• Strong balance sheet and Solvency II coverage ratio of 210%
• A £1.2 billion share buyback was announced in March

On March 11, after the full-year results were announced, CEO António Simões said:

This week we will launch a £1.2 billion share buyback – the largest in our history – which, together with a 2% boost in dividends per share this year, will deliver a planned shareholder return of £2.4 billion next year.

As of December 31, 2025, the company had £17 billion in cash and cash equivalents on its books. Does this sound like a cash cow that generates tons of profits and focuses on paying them out to shareholders? This applies to me.

Not all roses

However, I see some potential downsides that investors need to be aware of…

• Disappointingly modest 2% dividend boost for 2025
• The stock’s valuation seems perhaps a bit high
• Persistent inflation can harm businesses

Forecasts predict a robust year for earnings this year. But then they see earnings falling in 2027. If they’re right, that could push the legal and general price-to-earnings (P/E) ratio to 11.5 by then – assuming there’s no change in the share price.

The insurance sector has a cyclical history. Analysts could easily consider this valuation to be significantly high. At least my suspicion is that we probably won’t see much stock price growth. I took it into account iShares Core FTSE 100 ETF in the chart above to show how Legal & General shares have significantly lagged the FTSE 100 index over the last five years.

So should we buy?

High inflation can aid keep bond prices high. And this can offer income investors a low-risk alternative to dividend stocks.

However, even taking these factors into account, I can see how these positive points keep the company’s shares at the top of the UK dividend buy lists. So will I buy Legal & General shares? No, but it’s really just because I’m holding it Aviva — and diversification is always very significant. Aviva has a more modest yield forecast of 6.4%, but also a P/E ratio that is expected to fall rather than rise.

However, I believe that investors looking for long-term dividend stocks to add to their ISA should strongly consider Legal & General – as part of a diversified portfolio across a range of sectors.

Is it worth investing £5,000 in Legal & General Group Plc now?

If investing expert Mark Rogers and his team have stock advice, it can pay to listen. After all, Twelfth Magpie’s flagship Share Advisor newsletter, which it has run for almost a decade, provides thousands of paying members with the best share recommendations from across the UK and US markets.

Mark believes there are 6 standout stocks that investors should consider buying right now. Want to check if Legal & General Group Plc is on the list?

Alan Oscroft owns shares in Aviva.