The FTSE 100‘s packed with dividend stocks, and some of them pay much more generously than the index as a whole.
Admiral (LSE:ADM) does exactly that for a lot of investors. Its 4.8% yield is comfortably ahead of the FTSE 100’s 3.1% average. And buying 500 shares right now would instantly unlock about £793.50 in annual passive income.
So that creates an obvious question for income hunters: can a boring-looking insurer actually turn into a serious passive income machine? And is this even a good idea?
Investigating the dividend
As a quick crash course, Admiral’s best known for car insurance, but it also sells home, travel, pet, and personal loan products. That mix matters because it reduces reliance on a single line of business notorious for expensive claims.
But how does that show up in the financials?
Back in March, the company posted its full-year results for 2025, and they were pretty strong.
Admiral reported pre-tax profit of £957.9m, up 16% year on year, while customer numbers rose 7% to 11.8 million and dividend per share jumped 7% to a total of 205p. Although it’s important to highlight that 46.3p of this was special one-time dividends, putting the real underlying dividend per share closer to 158.7p.
Still, that’s pretty substantial. And with the group’s UK Motor business delivering more than £1bn of profit, the firm appears to be gaining meaningful momentum.
Is it still worth considering?
Admiral’s shown it can underwrite risk carefully, grow customers, and still return plenty of cash to shareholders. What’s more, the company’s solvency ratio stands at 193%, which suggests it still has room to keep supporting distributions while simultaneously investing in the business.
Meanwhile, management’s been pushing harder into multi-product relationships, digital tools, and new growth areas as part of its updated long-term growth strategy.
These actions are already materialising in the financials. And that kind of progress helps explain why institutional investors still see Admiral as more than just an old-school insurer.
It has a history of efficient underwriting, strong customer satisfaction, and a willingness to adapt when market conditions change – three proven winning traits within the insurance sector.
So far, this is sounding like a no-brainer. So what’s the catch?
What could go wrong?
Even with talented leadership, it doesn’t change the fact that Admiral operates in a highly cyclical sector with fierce competition.
In fact, intense rivalry actually caused UK motor insurance premiums to fall throughout the first half of 2025. That’s great for consumers. But for Admiral, it resulted in a slight dip in turnover, proving it isn’t immune to external market pressure.
At the same time, inflation’s a real risk factor, especially for motor insurance, which still dominates Admiral’s policy book. If the cost of parts and repairs climbs due to geopolitical and trade disruptions, higher claims could eat into the firm’s profit margin and, in turn, dividends.
So where does that leave investors? Overall, while the risks can’t be ignored, Admiral still looks like a compelling FTSE 100 income opportunity, in my eyes.
The firm has a strong balance sheet and some of the best margins in the sector, giving leadership some handy flexibility to navigate the market downturns. That’s why I think this business deserves a closer look.
Should you invest £5,000 in Admiral Group Plc right now?
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Zaven Boyrazian does not hold any positions in the companies mentioned.
