Director dealings are essentially insider transactions for shares between directors and the companies they work for. These dealings are always made public, and are often considered a good indicator of a company’s future prospects. However, they don’t get nearly as much attention as other company news due to their complex nature. Nonetheless, here I’m breaking down this week’s biggest director dealings from three FTSE firms.

Rolls-Royce

Rolls-Royce (LSE: RR) is a British multinational aerospace and defence holdings company. It is one of the world’s largest makers of aircraft engines, and operates in four different segments. These include civil aerospace, power systems, defence, and new markets.

After a disappointing set of H1 results, Rolls-Royce shares saw yet another decline. But this week, a number of director dealings were carried out. Most notably, there was a huge purchase of shares from Chairwoman Anita Frew. The purchase from such a senior director should improve sentiment surrounding the stock.

• Name: Anita Frew
• Position of director: Chairwoman
• Nature of transaction: Purchase of shares
• Date of transaction: 5 August 2022
• Amount bought: 50,000 @ £0.83
• Total value: £41,300

• Name: Lee Hsien Yang
• Position of director: Non-Executive Director
• Nature of transaction: Share purchase plan
• Date of transaction: 8 August 2022
• Amount bought: 1,161 @ £0.84
• Total value: £980.23

• Name: Wendy Mars
• Position of director: Non-Executive Director
• Nature of transaction: Share purchase plan
• Date of transaction: 8 August 2022
• Amount bought: 2,156 @ £0.84
• Total value: £1,820.31

• Name: Sarah Armstrong
• Position of director: Chief People Officer
• Nature of transaction: Share purchase plan
• Date of transaction: 9 August 2022
• Amount bought: 175 @ £0.86
• Total value: £149.84

• Name: Rob Watson
• Position of director: President (Rolls-Royce Electrical)
• Nature of transaction: Share purchase plan
• Date of transaction: 9 August 2022
• Amount bought: 175 @ £0.86
• Total value: £149.84

Admiral

Admiral (LSE: ADM) is a British-based insurance company. It specialises in car insurance products, but also has a line of other offerings. These include home insurance, travel insurance, pet insurance, and van insurance.

The FTSE 100 firm released its H1 results earlier this week. Although profits slumped by almost half, the stock still shot up by 15% this week. This was most likely due to the announced special dividend of 15.8p. This would bring its total dividend to 60.0p per share. Investor sentiment was also further boosted when the Chairwoman purchased shares worth over £25,000.

• Name: Annette Court
• Position of director: Chairwoman
• Nature of transaction: Share purchase plan
• Date of transaction: 11 August 2022
• Amount bought: 1,181 @ £22.44
• Total value: £26,501.64

Dunelm

Dunelm (LSE: DNLM) is one of Britain’s biggest home furnishings retailers with an ever-growing market share. It operates over a 170 stores throughout the UK and offers over 50,000 products across a broad range of categories.

The FTSE 250 firm released its Q4 trading update not too long ago, and the interim numbers resonated well with investors. Nevertheless, its bottom line figure is yet to be released, and investors are wondering whether their expectations will be met. Therefore, the recent purchases by its CFO and another director could be an indicator of an earnings beat. The company is expected to report its official FY22 results in less than a month’s time.

• Name: Vijay Talwar
• Position of director: Non-Executive Director
• Nature of transaction: Purchase of shares
• Date of transaction: 4 August 2022
• Amount bought: 9,670 @ £8.50
• Total value: £82,156.32

• Name: Karen Witts
• Position of director: Chief Financial Officer
• Nature of transaction: Purchase of shares
• Date of transaction: 5 August 2022
• Amount bought: 1,174 @ £8.45
• Total value: £9,922.18

Types of shares

To provide context, there are a few types of shares that can be purchased by directors. Some directors opt to purchase shares via the open market. Having said that, directors also have the option to purchase shares via a share incentive plan (SIP).

A SIP is an employee plan for companies within the UK to flexibly award shares to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this week’s set of director dealings, a certain number of directors opted to purchase shares via their companies’ share purchase plans. This allows employees to purchase shares through automatic deductions from their pay. And this was the case with a number of Rolls-Royce directors, as well as Admiral’s Chairwoman.

The post Director dealings: Rolls-Royce, Admiral, Dunelm appeared first on The Twelfth Magpie.

More reading

• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• Here’s how much I think Rolls-Royce shares will be worth by the end of 2027
• Could small modular reactors take Rolls-Royce shares to the next level?
• Is now the perfect time to buy Rolls-Royce, Babcock and BAE System shares?
• The SpaceX frenzy is over – is it time to look at Rolls-Royce shares again?

John Choong has positions in Dunelm Group. The Motley Fool UK has recommended Admiral Group. 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.

As inflation skyrockets, the State Pension is looking even more inadequate. Especially since Chancellor Rishi Sunak has suspended the annual triple lock uplift.

The triple lock increases the State Pension either by earnings, inflation or 2.5%, whichever is higher. Pensioners were on course for an 8% increase this year, as wages rocketed in the wake of the pandemic, until Sunak intervened.

I’d rather rely on UK shares

Sunak scrapped the earnings element of the triple lock, so that pensioners will get a rise of just 3.1% from April 6. With inflation set to hit 7.25% that month, according to the Bank of England, the State Pension will actually fall by £387 a year in real terms. UK shares can be risky too, but at least politicians don’t decide how much I get each year.

The State Pension is hugely important because it offers a steady, rising income in retirement. From April, it will pay up to £9,627.80 a year. I would need a portfolio of almost £200,000 to generate a similar-sized income. So it plays an important role, but it’s not enough to fund a comfortable retirement.

That’s why I’m investing in a balanced portfolio of global funds, to spread my risk and give me international exposure. I will complement this with a blend of UK shares.

I make regular monthly contributions into a personal pension and Stocks and Shares ISA, plus lump sums when I have spare cash. I particularly like to load up on UK shares in the wake of a stock market crash, when valuations are cheaper.

It’s never easy buying shares when stock markets are falling and everybody is panicking. I get round this by reminding myself that I am investing for the long term, at least 15 or 20 years. That allows plenty of time for stock markets to bounce back.

I will reinvest all the dividends from my UK shares for capital growth, while I’m still working. When I retire, I will draw them as income, to supplement my State Pension.

I’d buy these FTSE 100 stocks for passive income

There are loads of top FTSE 100 dividend stocks paying an incredible passive income to pensioners. Fund manager M&G currently yields staggering 8.60%, while insurer Phoenix Group Holdings yields 7.65%.

Admiral Group, Antofagasta, British American Tobacco and Abrdn all yield more than 6%. That’s around 10 times the return on the average savings account, even after last Thursday’s Bank of England base rate increase.

Incredibly, housebuilder Persimmon and global minor Rio Tinto yield more than 10% right now. Although I’m always wary when UK shares offer such dizzying yields, and would investigate them carefully before buying.

Naturally, UK shares can be risky. If markets crash, so will my portfolio. Some individual stock picks will inevitably underperform. Dividends can be slashed, as well as increased. There are absolutely no guarantees. But in contrast to the State Pension, that’s down to me, rather than the whims of the Chancellor of the day.

The post The State Pension will rise by less than inflation — that’s why I’m investing in UK shares appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Admiral Group and British American Tobacco. 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.

The reduced performance ultimately led to the FTSE 100 stock cancelling its dividends in early 2020. But despite the increased pricing pressure, total customer numbers grew by 6% in 2020. And dividends have been reinstated. So, is Admiral a dividend stock I should buy for my income portfolio? Let’s take a look.

A leader in UK car insurance

Admiral Group is a worldwide provider of insurance services. It offers home, travel, and motor insurance, with most of its customers buying the latter. In fact, the motor insurance option is so popular that it has become one of the UK’s largest car insurance companies.

Over the years, the company has built a portfolio of over 30 brands as well as starting its own financing services and law firm to provide legal protection for customers during claims. Combined, Admiral is now serving more than 7.1 million customers, most of them based in the UK.

What’s even more encouraging is the findings of a survey taken in early 2020 by Admiral. It revealed that 94% of its customers who made a claim last year would renew their policy. To me, this is an indicator that Admiral is providing high-quality customer service that may enable it to retain customers even if it can’t provide the cheapest possible price.

The FTSE 100 dividend stock has its risks

Operating an insurance company can be a risky business. Especially when it comes to motor insurance, which can have exceptionally-high-cost bodily injury claims. In some cases, the premium paid by customers may not cover the expenses incurred by them. In such cases, the firm has to pay out of its own pocket to cover the fees.

To offset this risk,  Admiral, like many other insurance companies, uses its enormous cash flows from monthly premiums to fund long- and short-term investments in the bond and stock markets. Then it uses the investment returns to cover the excess costs of claim expenses.

But this subsequently exposes the firm to market risk. There are significant regulatory restrictions in place to prevent insurance companies from making risky investments. But any volatility in the market is bad news for the firm and could jeopardise the shareholder dividend. The market crash in 2020 is proof of that.

Should I buy the dividend stock?

When looking to invest in dividend stocks, a consistent track record is something I like to see. And in my opinion, Admiral has just that.

More cars are getting back on the road. And the business appears to be providing high-quality customer service that will help to improve its renewal rates. Therefore, Admiral looks like it could be a good addition to my dividend portfolio. Especially since analyst forecasts indicate, the dividend yield will rise to 6% in 2021.

The post FTSE 100 stocks: is Admiral Group a dividend stock I’d buy? appeared first on The Twelfth Magpie.

More reading

• Here’s how much second income 100 Admiral shares could deliver in 2026
• How much would you need in a Stocks and Shares ISA to aim for £8,189 a year in dividend income?
• 500 shares of this FTSE 100 company unlock a passive income of…
• Income investors love insurance stocks. Here’s my top pick from the FTSE 100

Zaven Boyrazian does not own shares in Admiral Group. The Motley Fool UK has recommended Admiral Group. 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.

However, around a third of the FTSE 100 constituents currently support a dividend yield of more than 5%.

So, if you are seeking extra income, I think this is where you should be looking.

Special returns

One of my favourite FTSE 100 dividend stocks is the insurance group Admiral (LSE: ADM). Insurance can be a highly profitable business if done right, and Admiral seems to be doing just that.

Over the past six years, the company’s net profit has grown at a compound annual rate of 6% as it has steadily increased its market share of the UK car and home insurance market.

Management has also been investing in the group’s international divisions to complement growth at home. These businesses are not yet profitable, but they could be a great growth channel for Admiral in future years.

The insurer has also recently launched a loans business, where initial growth has been promising.

All of these efforts should help the company grow its distribution to shareholders in the years ahead. Historically, Admiral has returned virtually all of its earnings to shareholders through a combination of regular and special dividends.

City analysts expect this trend to continue. They’ve pencilled in a dividend yield of 6% for 2019 and 6.1% for 2020. While the stock does look slightly expensive – it is currently changing hand at a forward price-to-earnings ratio of 16.5 times – I think this is a price worth paying to gain access to Admiral’s market-beating dividend yield.

Cheap income

Another FTSE 100 income stock that I think you should consider instead of a Cash ISA is the UK’s largest free-to-air broadcaster, ITV (LSE: ITV).

Investors have been selling shares in ITV for the past two years on growth concerns, but, so far, the company has managed to surpass expectations. For example, in a trading update published last week, the firm informed investors that advertising revenue came in at the top end of the range in the third quarter, surpassing pessimistic City expectations, which were calling for a year-on-year decline.

This growth should help underpin the company’s dividend. At the time of writing the stock supports a dividend yield of 5.9%, rising to 6% next year. The distribution is covered 1.6 times by earnings per share, which leaves plenty of headroom if earnings should fall further.

As well as this attractive level of income, shares in ITV are dealing at a highly attractive forward earnings multiple of just 10.5. I believe this multiple fails to take into account the group’s strong competitive position in the UK’s media market and the value of its online business. Online revenues expanded by around 23% in the third quarter.

The market seems to be overlooking this business, but I think that is a mistake. With revenues growing at 23% per annum, it won’t be long before this becomes a major part of the business in my opinion. 

The post Forget the Cash ISA! These 2 FTSE 100 income champions yield 6%! appeared first on The Twelfth Magpie.

More reading

• £500 gets 617 shares in one of the top FTSE income stocks to buy!
• Here’s how to invest £3,600 in UK shares to target a 7% dividend yield
• Here’s how much second income 100 Admiral shares could deliver in 2026
• How much would you need in a Stocks and Shares ISA to aim for £8,189 a year in dividend income?
• 500 shares of this FTSE 100 company unlock a passive income of…

Rupert Hargreaves owns shares in Admiral Group and ITV. The Motley Fool UK has recommended Admiral Group and ITV. 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.

Today I’m going to highlight three of these stocks, which all support dividend yields of more than 6%.

Global income 

My first yield pick is mining giant BHP (LSE: BHP). In August, the group announced a record dividend, rewarding shareholders after several years of cost-cutting and efficiency improvements. The company is distributing $0.78 per share on top of the $17bn already returned to shareholders in 2019.

I think it is unlikely BHP will be able to do the same in 2020, as the figures have been flattered by one-off disposals this year. Nevertheless, City analysts believe the company will produce a net profit of $10bn in its current financial year, and they reckon the majority of this will be returned to investors.

Analysts have pencilled in a dividend yield of 6.6% for the year, although considering BHP’s track record of returning cash, I think this could be a conservative estimate. Demand for essential commodities like iron ore and copper is only growing, and BHP is only getting more efficient at mining them, which suggest further profit growth is on the horizon. 

Right now you can snap up shares in this cash cow for just 10.5 times forward earnings. 

Legal requirement

My next FTSE 100 income play is insurance group Admiral (LSE: ADM). Car insurance is a tough business. Customers want to pay the lowest cost possible and insurers are having to pay out more and more to put things right when they go wrong. 

Admiral has a track record of outperforming the rest of the industry. It does this with its sector-leading cost ratio and strict underwriting standards. These efforts have helped the company remain consistently profitable while other competitors have struggled.

Management is also branching out into other lines of business such as comparison websites, loans and international car insurance. These diversification efforts only make Admiral more attractive in my eyes. 

For 2019, City analysts believe the company will distribute 124p per share to investors, giving a dividend yield of 6.1% on the current share price. Over the past six years, the dividend has grown at a compound annual rate of 14%. 

Marketing giant

The final FTSE 100 income stock I’m going to profile is marketing giant WPP (LSE: WPP). 

Shares in this business have been a pretty poor investment over the past 12 months, falling 15% excluding dividends as investors have fretted about its future potential.

However, after earnings fell 25% in 2018, City analysts are expecting WPP’s recovery to start this year. There are already some signs that the recovery is taking hold. Sales fell by just 1.4% in the second quarter of 2019, outperforming analysts’ expectations of a 3% year-on-year decline. The numbers were also “slightly ahead” of internal expectations. 

In my opinion, this progress suggests WPP is more than capable of hitting the City’s dividend targets for the company over the next two years. Analysts are expecting a per share payout of just under 60p, giving a yield of 6.5% on the current share price. On top of this, the stock is changing hands at a forward P/E of just 9.3 — a steal for such a world-class business in my eyes. 

The post 3 FTSE 100 stocks with dividends over 6% I’d buy right now appeared first on The Twelfth Magpie.

More reading

• Here’s how much second income 100 Admiral shares could deliver in 2026
• How much would you need in a Stocks and Shares ISA to aim for £8,189 a year in dividend income?
• 500 shares of this FTSE 100 company unlock a passive income of…
• Income investors love insurance stocks. Here’s my top pick from the FTSE 100

Rupert Hargreaves owns shares in Admiral Group. The Motley Fool UK has recommended Admiral Group. 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.

Unfortunately, the market is also highly competitive, which means it is quite difficult for insurers to make a profit consistently.

Admiral has managed to buck this trend. The insurer has been consistently profitable by prioritising income and sensible underwriting policies over growth. The company also places extra emphasis on customer service. Customers might be paying more for their insurance in some cases, but the improved customer service makes up for it.

International growth 

Not only does Admiral have a vast captive market here in the UK, but it is also expanding overseas. And this is why I think the company could be a great income stock to buy and hold for the next 10 years.

This overseas business has been unprofitable since inception, but management is confident that it will be profitable shortly. 

Combined international insurance turnover grew by 23% during the first half of the company’s to 2019 financial year and customer numbers increased by 21%. The division lost a total of £2.7m during the first half, compared to a loss of £10.1m two years ago. So the figures are certainly moving in the right direction

On top of this, Admiral has been growing its operations here in the UK, diversifying into new lines of business such as offering personal loans. Once again, this division is not yet profitable and won’t be for some time. Still, it is growing rapidly. The total value of loans outstanding hit £421m at the end of Admiral’s fiscal first half, up from £300m at the end of 2018. Losses decreased from £6.4m to £4.3m year-on-year.

As well as its UK insurance business, international operations and financial services arm, Admiral also owns a stake in Confused.com as well as several international price comparison websites. These divisions generated a total income of £7.4m during the six months to the end of June, up more than 100% year-on-year.

Dividend champion 

Admiral is not a one-trick pony it is an international financial services giant with many different income streams and this is why I like the company as a dividend stock. It also has a track record of distributing virtually all of its profits to investors every year through a combination of regular and special dividends. 

Over the past six years, the stock’s total annual distribution has grown at a compound annual rate of 14% from 47p in 2013 to 90p for 2018. City analysts are expecting the company to distribute a total of 124p for 2019, which gives a dividend yield of 5.9% on the current price.

Unfortunately, shares in the business are not particularly cheap, currently changing hands for 17 times forward earnings. However, considering the fact that Admiral achieved an operating profit margin of 38% last year, I think this is a price worth paying. 

The post £2k to invest? I’d buy and hold this FTSE 100 income stock for 10 years appeared first on The Twelfth Magpie.

More reading

• Here’s how much second income 100 Admiral shares could deliver in 2026
• How much would you need in a Stocks and Shares ISA to aim for £8,189 a year in dividend income?
• 500 shares of this FTSE 100 company unlock a passive income of…
• Income investors love insurance stocks. Here’s my top pick from the FTSE 100

Rupert Hargreaves owns shares in Admiral Group. The Motley Fool UK has recommended Admiral Group. 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.

You see, I’m sceptical BT can maintain its current dividend because the telecoms giant needs to invest more to grow its business and retain customers. This is something management has commented on as well. Back at the beginning of July, chairman Jan du Plessis said management will consider reducing the dividend in “a year or two in the future” depending on its capital expenditure commitments.

The company says it will also look at cutting costs and borrowing more to help fund the expansion of its fibre broadband network over the next few years. BT’s promise to bring full-fibre broadband to 15m two households across the UK will cost between £400m and £600m a year, according to its own forecasts. 

Upcoming cut

With the threat of the dividend cut hanging over the BT share price, I don’t think it’s worth buying the shares at current levels. As well as the threat of a dividend cut, there’s also the company’s high level of indebtedness to consider, ginormous pension deficit (bigger than the market capitalisation of most FTSE 100 firms), and competition.

So, I would forget the BT share price and invest my money instead in UK insurance group Admiral (LSE: ADM). Compared to BT, I think Admiral is firing on all cylinders. The company is expanding its presence at home here in the UK, and investing heavily in growing out is overseas businesses. These are expected to break even for the first time in the next year or so. 

These overseas businesses, coupled with the fact Admiral is one of the most efficient general insurance companies in the country, are the reasons why I like this business so much. Specifically, Admiral’s return on equity — a key measure of profitability — was 56% for its 2018 financial year. Its closest competitor, Direct Line, reported a return on equity of just 18%.

Admiral is also branching out into financial services, having recently launched a loan product. This division is still unprofitable, but it is yet another string to the company’s bow that will help power growth in the years ahead.

Dividend champion

Admiral is hugely profitable, and the company is returning the majority of its excess profits to investors with dividends. The company tends to pay out a combination of both regular and special dividends, which analysts believe will total just under 130p per share for 2019. Based on this forecast, the stock supports a forward dividend yield of just under 6%.

So overall, Admiral’s dividend yield is lower than the level of income offered by BT, but I believe the company’s growth prospects are vastly more attractive. That’s why I would forget the BT share price and buy Admiral for my portfolio today instead.

The post Forget the BT share price, I’m buying this FTSE income champion instead appeared first on The Twelfth Magpie.

More reading

• Here’s how much second income 100 Admiral shares could deliver in 2026
• Why has the BT share price almost doubled – yet gone nowhere?
• Down 16% in 5 weeks, are BT shares just too good to miss?
• How much would you need in a Stocks and Shares ISA to aim for £8,189 a year in dividend income?
• Down 16% to around £2.03! Here’s where BT’s bargain-basement shares ‘should’ be trading right now

Rupert Hargreaves owns shares in Admiral Group. The Motley Fool UK has recommended Admiral Group. 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.

In fact, not only do I think these are the best FTSE 100 stocks to buy right now, but they’re also the most substantial holdings in my equity portfolio. I’m going to explain why.

A global leader

Prudential (LSE: PRU) is, in my opinion, one of the best-managed companies in the UK’s blue-chip index. The business has been the go-to life insurance and long term savings provider in the UK for decades, and its expansion into Asia was perfectly timed.

The group’s Asian business has been a key growth driver over the past decade, and analysts expect this trend to continue for the foreseeable future as the pensions and savings market across Asia is still relatively underdeveloped compared to Western countries.

Prudential wants to capitalise on this potential by splitting itself in two. The firm is planning to de-merge its UK business, M&G Prudential, from the international company, which should unlock value for shareholders. Indeed, I calculate that the sum-of-the-parts (SOTP) of these two businesses is over 2,000p per share, that’s around 15% above current levels. Some analysts believe the SOTP is even higher, with estimates suggesting it could be as high as 2,500p.

The group is expected to complete its breakup at some point in the next 12-24 months, and this should unlock the value I’ve mentioned above. In the meantime, the shares support a dividend yield of 3.1%.

Dividend champion

As well as Prudential, I’m also buying insurer Admiral (LSE: ADM) for my ISA portfolio. There are a handful of insurance businesses that trade on the London markets, but Admiral stands out to me because it has the highest profits margins of them all.

The enterprise reported an operating profit margin of 37.7% last year, compared to the industry average of 9.2%, because the group has the lowest costs in the sector. Insurance companies can’t do much about the level of claims they have to pay out to customers, but they can control their cost base. And Admiral has invested a considerable deal of time and effort in trying to make sure its costs remain as low as possible.

By keeping costs low, the company can offer a better service to customers while still achieving a good result for shareholders.

The company is somewhat of a dividend champion, paying out a combination of regular and special dividends every year, depending on the environment. For 2019, analysts are expecting the firm to distribute around 137p to shareholders giving a prospective yield of 6.2%.

Unfortunately, this level of income doesn’t come cheap. The stock is currently trading at a forward P/E of 17. However, I think this is a price worth paying for Admiral’s market-leading profit margins.

The post Two FTSE 100 shares I’m buying for my ISA appeared first on The Twelfth Magpie.

More reading

• Thinking about a SIPP for retirement? Here are 3 starter stocks to consider
• Here’s how much second income 100 Admiral shares could deliver in 2026
• How much would you need in a Stocks and Shares ISA to aim for £8,189 a year in dividend income?
• How much do you need in a Stocks and Shares ISA to generate £100 a day in passive income?
• FTSE 100 value stocks: where has the market become too pessimistic?

Rupert Hargreaves owns shares in Prudential and Admiral. The Motley Fool UK has recommended Prudential. 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.

Insurance income

First up there’s Admiral (LSE: ADM). This firm is probably one of the best-managed insurance businesses in the UK, and it shows in the group’s profit margin. Last year the company reported an operating profit margin of 37.7%, compared to the UK insurance industry average of 10.5%. 

A strong focus on managing risk as well as reducing costs over many years has helped the company get to where it is today, and it doesn’t look as if this is going to change any time soon.

The UK insurance market is extremely competitive, which Admiral’s management knows all too well. So, rather than getting tangled up in a race to the bottom on price, chasing growth at the expense of profitability, the company has decided to branch out into other businesses. It recently launched Admiral loans, which has already lent out more than £300m, although it is not profitable just yet. 

In addition, the group is also investing in its presence overseas. It has a large business in Italy, Spain and France as well as a presence in the United States. In aggregate, these businesses are still making a loss, but just like the loans business, I’m excited about their future potential. The number of international car insurance customers increased by 18% in 2018 to 1.22m and losses from the international division decreased by £13.2m. In 2017, Admiral’s international arm lost £14.3m. Last year the loss had improved to £1.1m indicating this business will start contributing to the bottom line in 2019 or 2020.

All of these growth initiatives are good news for the company’s dividend outlook. Analysts believe the firm will pay out 137p per share in 2019, giving a dividend yield of 6.1% and it seems to me as investors could see substantial dividend growth in the years following. That’s why I’ve added this stock to my ISA.

Bricks and mortar

Another FTSE 100 income stock I like is Landsec (LSE: LAND). This is the UK’s largest listed property company with a market capitalisation of £6.8bn. 

Recently, the stock has come under pressure as investors are worried about the company’s exposure to the UK High Street. Rising retail bankruptcies are bad news for landlords who have to take the property back and might not find another tenant to take on the lease.

However, in my opinion, Landsec is relatively insulated from this trend. Virtually all of the company’s retail properties are located in central London, and while its retail parks and shopping centres are spread around the rest of the UK, overall, retail properties only make up around 40% of the mix. The rest is made up of hotels, London offices and shops in London. 

As the values of London properties have remained relatively stable over the past two years, I do not think Landsec deserves to trade at its current discount to net asset value of 34%. As well as this discount, the shares also support a yield of 5.3%. A yield of 5.3% from central London property is too good to pass up in my opinion.

The post 2 FTSE 100 dividend stocks I’d buy before the ISA deadline appeared first on The Twelfth Magpie.

More reading

• Here’s how much second income 100 Admiral shares could deliver in 2026
• How much would you need in a Stocks and Shares ISA to aim for £8,189 a year in dividend income?
• How much do you need in an ISA to earn £19,999 a year on top of the State Pension
• How much is needed in FTSE 100 stocks to make £1,547 in monthly second income?
• 500 shares of this FTSE 100 company unlock a passive income of…

Rupert Hargreaves owns shares in Landsec and Admiral Group. The Motley Fool UK has recommended Landsec. 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.

Its healthy rating, a forward P/E multiple of 16.8 times, may sit above the index’s broad average, but the heavy price slump that followed last week’s trading release suggests many have fallen out of love with the car insurance giant.

Investors were turned off by news that “continued inflation in damage claims and increased large bodily injury frequency” at its Motor division caused its loss ratio to rise 20 basis points at group level to 66.4%. This forced Admiral to hike the cost of its policies, delivering a smack to sales growth in the second half of 2018.

Concerns regarding competition in the auto market have been doing the rounds now, and so Admiral’s decision to raise premiums higher more than its competitors has done little to soothe nerves.

Multinational mammoth

That said, there’s still plenty to celebrate in those full-year results, in my opinion, and reason to expect earnings to keep rising (incidentally City analysts are predicting a 7% bottom-line improvement this year).

I’ve lauded Admiral’s long-term sales opportunities in foreign markets time and again. In fact, 2018 proved a significant step on its journey to conquer Europe as its International divisions delivered combined profits growth for the first time — last year the number of international car insurance customers on its books leapt by 18% to 1.22m.

The British insurer now has almost the double of overseas customers that it had just three years ago, and with it having established a  Spanish insurance company last year to switch its European portfolio to, Admiral’s well placed to absorb any troubles emanating from Brexit and to keep growing sales across the European Union.

It’s no wonder then that the number crunchers are predicting that Admiral will have the confidence to raise the total dividend again this year, to 131.4p per share from 126p in 2018, a figure that yields a brilliant 6.1%.

Another large yielder

Whilst you’re here I’d like to bring your attention to National Express Group (LSE: NEX), another brilliant big-yielder that’s making a splash in foreign marketplaces.

The FTSE 250 bus and rail operator’s share price has leapt to record highs last month after releasing brilliant full-year financials which showed sales growth at each of its divisions accelerate during the second half of 2018, causing the firm to deliver decent sales and pre-tax profit growth last year (up 7% and 11%, respectively).

National Express made 10 acquisitions spanning North America and Spain last year, transactions that helped revenues hit record tops in both regions. And thanks to its strong balance sheet (free cash flow swelled 36% to a shade under £200m in 2018), it can carry on pursuing its successful M&A-led growth strategy, not to mention maintain its generous dividend policy.

This means that right now National Express carries a chunky 3.8% forward dividend yield, underpinned by expectations of a 5% earnings rise for 2019, too. Throw a low corresponding P/E multiple of 12.3 times into the mixer, too, and I think the business is another great stock to snap up today.

The post Income alert! I reckon this 6%-yielding FTSE 100 dividend stock could make you rich appeared first on The Twelfth Magpie.

More reading

• Here’s how much second income 100 Admiral shares could deliver in 2026
• How much would you need in a Stocks and Shares ISA to aim for £8,189 a year in dividend income?
• 500 shares of this FTSE 100 company unlock a passive income of…
• Income investors love insurance stocks. Here’s my top pick from the FTSE 100

Royston Wild has no position in any of the shares mentioned. 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.