Authorized & Common (LSE: LGEN) shares include a trailing dividend yield of 8.36%, one of many highest on the FTSE 100.

Normally, a yield that top would set alarm bells ringing. However I feel it’s sustainable. If I didn’t, I wouldn’t have purchased the inventory a number of instances in 2023.

What offers me confidence is its payout historical past. Over the previous 15 years, Authorized & Common has elevated its dividend each single yr however one. The exception was 2020, in the course of the Covid pandemic. I’ll forgive that. The federal government was twisting arms on the time. Funds resumed the subsequent yr.

Over 15 years, Authorized & Common’s dividends have grown at a compound charge of 12.12% a yr. That’s spectacular however one factor worries me. The expansion charge has slipped to six.62% over 10 years and simply 3.98% over 5.

Dividend route

Nearer inspection reveals payouts have risen 5% in every of the previous 4 years, however there’s change coming. Between 2025 and 2027, the board solely plans to extend them by 2% a yr.

I’ve defended that call earlier than. With such a beneficiant yield, a decrease progress charge didn’t seem to be a giant deal. However put subsequent to a broader slowdown in dividend progress, I’m now not brushing it off fairly so simply.

This issues, as a result of Authorized & Common shares have performed badly. They’re up simply 3.4% over one yr and fewer than 3% over 5. In the identical time, large FTSE 100 rival Aviva (LSE: AV.) grew 30% and 120%, respectively. That’s a bruising comparability.

Aviva’s dividend progress can also be a transparent winner. Over the past 5 years, Aviva has grown its payout at a compound annual charge of 18.4%. It even paid a dividend in 2020, which now seems like a badge of honour.

Development fear

I’m clearly backing the slower horse, and Aviva’s latest buying and selling replace has solely widened the hole. On 15 Could, the insurer heralded a “great start” to 2025, with premiums rising by nearly 10%. CEO Amanda Blanc sounded upbeat, saying the group had a powerful steadiness sheet, clear technique, and was hitting targets throughout progress areas.

Aviva is now aiming for £2bn in working revenue by 2026, and cumulative money remittances of greater than £5.8bn by then.

To be honest, Authorized & Common isn’t asleep on the wheel. In March, it hailed “strong” 2024 efficiency and unveiled a £500m share buyback. That’s a part of a wider £5bn capital return plan over three years, roughly 40% of its market worth.

Sitting tight

I received’t be switching horses. It at all times appears that the minute I modify queues – on the airport, within the financial institution, wherever – the one I simply left begins transferring sooner. That will certainly occur if I hopped over to Aviva now.

Additionally, I desire the concept of shopping for laggards that would bounce again, reasonably than chasing winners after they’ve already flown. Now right here’s the clincher. Authorized & Common nonetheless pays me handsomely. I acquired £305 in dividends on Thursday and promptly reinvested the lot.

Aviva gives a strong 5.75% yield. Traders may take into account shopping for it for added progress potential. However for me, Authorized & Common’s shareholder returns are too juicy. I’ve at all times had a candy tooth.