Forget Legal & General and buy this UK dividend stock instead.

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Legal & General (LSE:LGEN) shares currently offer a 9% dividend yield, and the company has a strong track record of being disciplined when it comes to paying out dividends to shareholders.

However, I think there are better opportunities for investors looking for passive income. I think both the FTSE 100 and FTSE 250 currently have attractive dividend stocks.

Legal and General

On the surface, Legal & General stock looks like a great investment opportunity. It’s a rare example of a stock with a 9% dividend yield that isn’t a tobacco company.

It's an insurance company, and unlike cigarette sales, demand for life insurance is not structurally declining, so there's definitely a lot to like.

However, it is not a stock I would buy. Contracts in the life insurance industry can last for decades, which means there is a long period of time when unexpected losses can occur. That is enough to keep me from buying the stock.

If I were to buy shares in a life insurance company, I would choose Legal & General, but given the industry structure, it's still on the list of companies to avoid.

Diageo

For my portfolio, I would rather buy Diageo (LSE:DGE) shares. This stock has a much lower dividend yield of around 3.5%, but I think the outlook is much more predictable than Legal & Generals.

Diageos has been dealing with its own set of issues of late, including weakening consumer spending in the US and the depreciation of the Nigerian naira against other currencies.

But these seem like short-term issues. In the long run, the company's category-leading brands and unrivaled distribution give it a huge advantage over its competitors.

I also believe that the premium spirits market will grow over time, so having a dominant position in an important industry makes Diageo stock a good choice even if the dividend yield is much lower.

Evestock

Ibstocks (LSE:IBST) is another stock that you might be happy to buy at today's prices. The FTSE 250 brick manufacturer's shares offer a 4% dividend yield and attractive long-term prospects.

Higher costs are a potential risk. With the Bank of England targeting 2% inflation per year, companies will have to find ways to raise prices or face pressure on margins.

I think Ibstocks is well positioned in terms of pricing. The UK has a housing shortage and there is not enough local supply to meet the demand needed to fix it.

As a result, I see this stock as a stable source of income going forward. That's why I prefer it over Legal & General, as Legal & General's outlook is fundamentally uncertain.

Passive income

It's easy to see why passive income investors would be drawn to Legal & General stock, but I think the 9% dividend yield is an attempt to compensate for the potentially significant long-term risk.

In my portfolio, I would take Diageo over Ibstock. It may have lower returns in the short term, but I think it is worth it because it is relatively predictable.

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