I may write a whole essay on FTSE 100 shares that I really like. However proper now, I’m targeted on one particularly: Authorized & Normal (LSE: LGEN).

Its efficiency in current occasions has been underwhelming. Yr to this point, in a interval the place the FTSE 100 has climbed 8.1%, Authorized & Normal is down 6.8%. Within the final 12 months, the place the index is up 8.5%, the monetary providers stalwart has misplaced 0.8% of its worth.

However even with that weak efficiency, I’m bullish. Let me break down why I’m such a giant fan of the inventory.

An affordable valuation

Immediately, I believe the inventory appears low cost. That’s going off its ahead price-to-earnings ratio, which sits at simply 10.2. For comparability, the FTSE 100 common is round 12.

For a enterprise of Authorized & Normal’s stature, with its sturdy model recognition and dominant market place, I believe that appears like cracking worth on paper.

A second earnings

I’ve additionally been utilizing Authorized & Normal to construct a second earnings. With an 8.8% dividend yield, it’s one of many shining stars in my portfolio in relation to offering passive earnings.

It might sound lazy, however I wish to purchase shares immediately that I can depart in my portfolio for years and a long time to return with the arrogance that they’ll maintain paying me dividends.

I don’t wish to should maintain worrying about whether or not its dividend is more likely to be lowered or axed within the subsequent few years. After all, it’s unimaginable to fully mitigate towards that as dividends are by no means assured.

That stated, I’m assured that Authorized & Normal will maintain offering a steady stream of money sooner or later. And that’s an extra motive why I just like the inventory.

It has a formidable monitor document of emphasising shareholder returns. It’s on monitor to return up to £5.9bn in cumulative dividends by the tip of this yr. As a part of that, it has been rising its dividend by 5% every year. Administration has stated it intends to do the identical for 2024.

In all equity, in its current outcomes, it introduced its plans to cut back that to 2% a yr from subsequent yr onwards. However I gained’t be complaining so long as its payout retains rising, irrespective of how huge or little that rise could also be.

The dangers

Whereas the mixture of an inexpensive valuation and meaty yield is engaging, I see a couple of threats.

The most important is the present financial atmosphere. Uncertainty surrounding inflation and rates of interest will proceed to impression the enterprise. Its property below administration have meandered up and down in current occasions as investor confidence has wavered.

Moreover, regardless of its dominant market place, there’s the continued menace of rising competitors.

One to think about

However regardless of these dangers, analysts stay bullish on Authorized & Normal. Sixteen analysts providing a 12-month goal price have a consensus estimate of 264.4p. That’s a 14.1% premium from its present price.

On prime of that, 16 of the 17 analysts giving a inventory score have it as both a ‘strong buy’, ‘buy’, or ‘hold’. As such, if I had the money, I’d purchase some extra shares immediately. And I believe it’s a FTSE 100 inventory buyers ought to take into account taking a better take a look at.