It’s exhausting to select my absolute favorite FTSE 100 inventory however one portfolio holding seems fairly unbeatable in the present day. It combines a dirt-cheap valuation with an ultra-high yield, and few of the dangers I’d count on with that intoxicating mixture.

The inventory in query is insurer and fund supervisor Authorized & Basic Group, (LSE: LGEN). I prefer it a lot I made two purchases over the summer time and I’m itching to purchase extra.

A favoured portfolio holding

This blue-chip has been a family title for so long as I can keep in mind, but currently it appears to have fallen off traders’ radar screens. It’s the identical story with fellow FTSE 100 insurers and asset managers Aviva, Phoenix Group Holdings and M&G. All are low-cost and provide large yields.

The troubles of the previous few years have weighed closely on their share costs, because the pandemic, struggle and cost-of-living disaster introduced everyone down. The sector ought to often do higher when the inventory market is rising as it will drive up belongings underneath administration and increase buyer inflows as traders return.

The Authorized & Basic share worth has fallen 16.45% during the last 5 years. Measured over 12 months, it’s up 4.71% however currently it’s been drifting downwards once more.

On the Idiot, we like shopping for shares backed by a powerful underlying enterprise which have been hit by broad market volatility. I feel L&G matches that description properly.

On 15 August, it reported an working revenue of £941m, which was a slight dip on the earlier yr’s £958m, however respectable given present worries. It boasts an excellent robust Solvency II protection ratio of 230%, up from 212% in 2022.

Regardless of that, it’s buying and selling at a valuation I would count on from an organization in serious trouble, simply 5.8 instances earnings. That’s lower than half in the present day’s FTSE 100 common valuation of 12 instances.

I don’t count on the L&G share worth to spring again into life and quickly shut that valuation hole, given ongoing volatility. What it does do, although, is give me safety towards an additional dip in sentiment. I don’t really feel that I’ve overpaid for the inventory.

The dividends are coming

If the share worth takes time to get better, that’s nice by me. It means my reinvested dividends will choose up extra inventory on the lower cost. I obtained my first interim fee on 26 September. As I hope to maintain the inventory for many years, I’m trying ahead to receiving many, many extra.

Authorized & Basic is now forecast to yield 9.14% in 2023 and 9.6% in 2024. Usually, such dizzying yields would have me working for canopy, however these actually do look sustainable. The newest interim distribution of 5.71p was 5% greater than final yr’s 5.44p.

Dividends are by no means assured however L&G is producing enormous quantities of capital. It could be good to get some share worth progress as effectively, sooner or later. It’ll come, given time.

A inventory market crash and world recession might solid a shadow over the corporate, however since I’m holding for the long run, I’ve time to get better. If L&G shares do get even cheaper, I’ll dive in and purchase extra. In truth, I would purchase anyway. It’s my favorite FTSE 100 inventory, in spite of everything.