At 9.2%, this FTSE 100 income share has the highest forward dividend yield in the index

What is the biggest-yielding income share in the FTSE 100 index?

On paper, it is ad group WPP, with its 10.3% yield. But WPP has signalled a reduction in its dividend.

That means that the biggest forward dividend yield of any FTSE 100 share is the 9.2% offered by Legal & General (LSE: LGEN).

Could it be headed for a cut too? Or might this be a high-yield bargain for investors to consider?

No dividend is ever guaranteed

WPPâs story is a sadly familiar one.

Its industry has been going through a challenging period and profits have slumped. Whether that turns out to be a bump in the road or something more permanent remains to be seen.

What about Legal & General? A high yield can sometimes be a red flag that investors are unsure whether a dividend can last. Could that be the case here?

A solid business in an economically attractive industry

Unlike advertising in the shadow of AI, financial services is not an industry wrestling with a potentially existential crisis. Demand is high â and resilient.

Over the years, Legal & General has narrowed its strategic focus to concentrate primarily on the retirement-linked business.

That strikes me as an attractive business area. The sums involved are large and customers have a long-term mindset.

The company has been solidly profitable, although its earnings have declined steeply over recent years. Earnings can move around a lot due to non-cash financial charges, though.

Looking instead at cash generation, Legal & General remains a strong cash generator. That is important for an income share, as spare cash can fund dividends.

Long-term dividend potential

The company aims to grow its dividend per share by 2% annually. It has also been spending excess cash on buying back its own shares.

No dividend is ever guaranteed to last. But that stated ambition of regular growth (albeit modest) alongside buybacks underlines that the company feels confident about its ability to keep generating surplus cash.

If it can do that, Legal & General could well continue to raise its dividend per share in years to come.

The agreed sale of its US protection business, while raising cash in the short term, does, however, pose a risk to long-term cash generation potential.

Another risk I see is choppy financial markets hurting profits. After all, the last time Legal & General cut its dividend was during the 2008 financial crisis.

Over the long term, I like the business and its prospects.

The share price performance has been disappointing â a 10% fall over the past five years, versus a 50% gain for the wider FTSE 100 index during that period.

For me the appeal here is primarily about the shareâs income potential, but that price fall is still concerning.

However, past performance is not necessarily a guide to what will happen in future. I see Legal & General as an income share investors should consider.

The post At 9.2%, this FTSE 100 income share has the highest forward dividend yield in the index appeared first on The Motley Fool UK.

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C Ruane has positions in WPP. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.