The Authorized & Common (LSE: LGEN) share price is having a shocker after falling 18.25% over the past 5 years.

To be truthful, it’s in constructive territory over the past 12 months, climbing 6.68%, however it’s been sliding once more in current months. The plus facet is that it provides one of the dazzling dividends on the blue-chip index, with a trailing yield of 9.22%.

So does that sky-high yield cancel out a poor inventory efficiency? A back-of-a-fag-packet calculation suggests long-term traders will nonetheless be up round 25% over that interval, so arguably it does. It’s not good although.

FTSE 100 dividend revenue hero

Usually when a yield heads in the direction of double digits, traders fret over whether or not the dividend’s sustainable. On this case, I’m not too fearful. Authorized & Common has a strong observe file of dividend will increase, as this chart exhibits.

Chart by TradingView

Development is about to gradual although. The board hiked the dividend by 5% to 6p a share for 2024, however this will probably be adopted by extra modest annual progress of two% thereafter. I discover it exhausting to complain given the excessive revenue stream.

The board additionally introduced a £200m share buyback, which is fairly modest however at leasts means that L&G isn’t bereft of money. It’s planning extra.

On 7 August, Authorized & Common posted first-half income of £849m. Whereas they rose simply 1%, that beat analyst forecasts of £834m. It expects 2024 core working earnings to develop by mid-single digits.

One factor worries me. That enhance was pushed by annuity gross sales, which greater than doubled to £1.2bn as increased rates of interest boosted the revenue they pay. Demand has spiked as pensioners anticipate falling rates of interest, however is prone to decline quickly.

The majority annuity market ought to assist drive earnings in future although, as extra firms move on their pension scheme obligations. Competitors’s robust although, as rival insurers are additionally vying for the enterprise.

This inventory isn’t filth low-cost

Many of the large FTSE insurers and asset managers are in an analogous place to Authorized & Common. Whereas their shares wrestle, yields are heading to 9% and past. Abrdn, M&G and Phoenix Group Holdings spring to thoughts.

What all of them want is an effective old style bull market run. Don’t all of us? We’ve had one in US tech, however we may do with a broader, deeper inventory restoration.

If rates of interest fall, so will financial savings charges and bond yields. That may make the sky-high yields on FTSE financials look much more enticing, persuading revenue seekers to take a bit extra of a punt.

I’ve been saying that each one 12 months, however it hasn’t occurred but. Once I purchased L&G shares final 12 months they had been buying and selling at a price-to-earnings ratio of round seven. As earnings stagnate, that’s shot up to 30 instances. So it’s not as low-cost because it was.

The 17 analysts providing one-year share price forecasts have set a median goal of 261.1p, up 18.69% from at this time’s price. If right, that may be good, particularly as soon as added to the dividend.

I’ve no thought when the Authorized & Common share price will recuperate, or whether or not it would fall additional. However whereas I wait, I’ll reinvest each dividend I obtain. Sarcastically, the longer the restoration takes, the extra shares I’ll maintain when it lastly occurs. I’m on this for the long term.