Among the highest-yielding stocks in the FTSE 100, Legal & General (LSE: LGEN) and Investec (LSE: INVP) stand out as compelling options for income-focused investors.
Legal & General currently offers a dividend yield of 7.36%, while Investec trails slightly behind at 6.21%, making both attractive candidates for those seeking second income.
Legal & General’s appeal goes well beyond its yield, with the company managing over £1trn of assets and generating recurring cash flows from retirement products.
Those retirement products benefit directly from the UK’s ageing population, giving the business a structural tailwind that supports long-term earnings visibility.
Management has committed to returning around £5bn to shareholders between 2025 and 2027, underlining confidence in the company’s ability to sustain generous payouts.
Core earnings per share increased by 9% in the latest full-year results, demonstrating that profits are still growing despite the company’s mature profile.
Legal & General paid a total dividend of 21.79p per share for 2025, up from 21.36p the previous year, continuing a long track record of growing shareholder payouts.
Investec, meanwhile, should not be overlooked, as the specialist bank continues to deliver impressive profitability across multiple business areas.
Its full-year results noted “ongoing client acquisition, client activity, growth in average lending portfolios, and continued net inflows” as factors helping the outperformance.
Over the past year, Investec’s share price is up 3%, compared to an 18% gain for Legal & General, suggesting Legal & General has recently been the stronger performer on price appreciation as well.
Investec lifted its total dividend to 38.5p per share for its latest financial year, while maintaining a conservative payout ratio of 46.4%, signalling that its dividend remains comfortably sustainable.
Some investors may view Investec as more of a growth stock, with greater opportunities to scale in the coming years and potentially deliver larger increases in dividend per share over time.
However, Investec’s operations in South Africa introduce an element of geopolitical risk that may give some investors pause when assessing its long-term stability.
Legal & General faces its own risks, as changing regulation in the insurance space could negatively impact operations if the regulatory environment shifts significantly in the future.
For investors prioritising dependable, inflation-beating dividends, Legal & General’s higher yield and consistent payout growth make it a strong candidate for a second income portfolio.
Those willing to accept a degree of economic sensitivity in exchange for potentially faster earnings growth may find Investec to be the more rewarding pick over the longer term.
Ultimately, both stocks offer genuine income credentials, and the right choice depends on whether an investor values yield certainty or growth potential more highly.
