In the world of investing, the question of how many shares to buy to achieve financial independence is a common one. And when it comes to Legal & General (L&G) shares, the potential for generating passive income is particularly intriguing. With a current dividend yield of 8.5%, L&G shares offer a compelling opportunity for investors looking to retire early or achieve financial freedom. But how many shares would an investor need to buy to make this a reality? And can the company sustain these dividends in the long run?
Personally, I think this is a fascinating question, especially given the current economic climate. The Office for National Statistics projects a median average salary of £39,000 in 2026, which means an investor would need a capital pot of £448,276 to generate that income from L&G shares with an 8.7% yield. This is a significant amount, but it's not impossible to achieve. In fact, by investing just £10 a day, an investor could build a substantial capital pot over time, thanks to the power of dividend compounding.
However, the sustainability of these dividends is a concern. L&G's earnings growth is forecast to be strong, with an average of 15.4% a year over the medium term. But there are risks, such as a prolonged downturn in financial markets, which could reduce fee income. Additionally, tighter regulatory capital requirements could limit the company's ability to drive earnings growth. Nevertheless, L&G's 2025 results show a significant increase in profit before tax, and its Solvency II operational surplus reinforces its ability to generate recurring capital.
From my perspective, L&G shares are a solid investment for generating serious dividend income. With a forecast yield rise, it's well-positioned to reward patient shareholders. However, investors should be aware of the risks and consider diversifying their portfolios to mitigate potential losses. In my opinion, the key to success is a long-term perspective and a willingness to adapt to changing market conditions.
In conclusion, while the number of shares an investor needs to buy to retire early is significant, it's not an impossible goal. With careful planning and a long-term investment strategy, it's possible to build a substantial capital pot and achieve financial freedom. But investors should be aware of the risks and consider their own financial circumstances before making any investment decisions.
