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.

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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.

Profits jump!

Perhaps supported by the huge demand for second-hand cars recently, Admiral added a healthy 640,000 new UK customers over the period. This was a 12% increase compared to the same period in 2020. A 14% rise in international policyholders to 1.71 million was also seen. 

With numbers like these, it’s no surprise Admiral’s bottom line looked very healthy. Group pre-tax profit came in at a little over £482m — a jump of 76% on that achieved last year! Pandemic aside, that’s quite a result.

Commenting on today’s results, CEO Milena Mondini de Focatiis said Admiral had “done the right things more often and a bit earlier than most.” This included offering more digital options to policyholders. The fact that the UK was still in lockdown in early 2021 no doubt helped as well. Fewer people on the roads meant fewer claims for the FTSE 100 constituent.

The good news doesn’t stop there. 

Another special dividend

This morning, Admiral conferred a 115p per share dividend to its owners. Broken down, this was made up of an 87.9p normal payout. The remaining 27.1p was a special dividend. This represents a stunning 63% increase on that awarded this time last year. 

And there’s more. On top of this, Admiral also announced another special dividend of 46p per share following the sale of its Penguin Portals comparison business. Importantly, this is only the first payment of a phased return of cash to those holding ADM’s stock.

This brings the total to a stonking 161p. Even if we ignore whatever Admiral decides to return to owners at the end of the financial year, that’s already a yield of 4.6% based on today’s share price! 

But there’s certainly more to Admiral than just the dividend stream. This is a FTSE 100 company that consistently delivers excellent margins. While certainly not high, returns on capital are also better than at competitors. With this in mind, it’s not really a surprise the Admiral share price has done so well over the last 12 months (+38%).

Now, if I were hunting for income from my investments, Admiral would certainly make my list of worthy candidates. This isn’t to say there aren’t a few things to be aware of.

Has the Admiral share price peaked?

Naturally,  we should expect the company to see claims increase as more of us get back into our cars. This being the case, the Admiral share price might not motor at quite the same pace as it has over the last year. 

It’s also worth keeping in mind that today’s interim payout already amounted to 87% to first-half earnings. As such, growth to the normal dividend might not be so strong going forward.

Finally, it’s worth reflecting on the valuation. At 15 times earnings, the shares aren’t as cheap as those of other FTSE 100 and FTSE 250 insurers. Aviva, for example, changes hands at a P/E of less than 8. In the second tier, Direct Line can be snapped up for 13 times earnings. 

So, while I do like the stock, I’d also run the rule over those companies before buying.

The post Here’s why the Admiral share price is climbing again appeared first on The Twelfth Magpie.

More reading

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• 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

Paul Summers has no position in any of the shares mentioned. 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.

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?
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• 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.

Let’s take a closer look at three examples of stocks that investors can’t seem to get enough of.

Fewer claims, higher profits 

Shares in insurer Admiral (LSE: ADM) are up 14% in the last month alone. If you’d bought back in the middle of a miserable March, you’d now be sitting on an even bigger gain of around 43%. 

This popularity isn’t a complete surprise. Last week’s interim results revealed a 31% rise in statutory pre-tax profit to £286.1m. At least some of this is due to the company receiving fewer motor claims in March and April as the UK was forced into lockdown.

Another attraction has been the company’s decision to reinstate its special dividend. The 20.7p per share payout will now be distributed in addition to a half-year dividend of 70.5p. 

Despite its high margins and income credentials, Admiral now trades on a forecast price-to-earnings (P/E) ratio of 20. This makes it significantly more expensive than top-tier peer Direct Line Insurance (13 times earnings).

After such a strong performance, I think the share price might soon pause for breath. 

Lockdown beneficiary

A second stock from the FTSE 100 that’s been doing very well is B&Q and Screwfix owner Kingfisher (LSE: KGF).

A beneficiary of people having (a lot) more time on their hands lately, Kingfisher recently reported a 21.6% jump in like-for-like sales in the second quarter of its financial year (to 18 July).

As a result of this and cost-cutting measures, the company now believes that half-year adjusted pre-tax profit will come in ahead of that achieved last year. 

Unsurprisingly, investors have reacted positively. Over the last month alone, Kingfisher’s stock has climbed 19% in value. If you’d bought when the world was going to hell in a handcart back in March, you would have doubled your money by now. That’s a much better return than the 22% achieved by the index. 

Whether this momentum can last, however, is debatable. With restrictions lifted and people slowly returning to work, the shares may begin to lose steam.

A forecast price-to-earnings ratio of 14 is far from excessive, but with a lot of debt still on the balance sheet, I wouldn’t go chasing the stock from here.

Pride before the fall?

A third FTSE 100 company that’s been doing very well is Ocado (LSE: OCDO). Up 10% in the last month and well over 100% since early March, the online grocery retailer continues to attract momentum-chasing investors. 

Since betting with the trend can often prove a winning strategy, I don’t doubt there’s a chance to still make money with Ocado. Once again, however, I would caution that this company is far from a risk-free bet.

Lockdown helped retail revenue soar by 27% year-on-year in the six months to the end of May but the company is still making a loss. That’s concerning when, at nearly £18bn, Ocado’s valuation is approaching that of FTSE 100 peer Tesco. After all, the latter boasts a near-27% share of the grocery market. There’s also Amazon to worry about. 

The Hatfield-based business will surely benefit from the shift to online grocery shopping. At this price, however, it simply must deliver. 

The post Investors can’t stop buying these FTSE 100 stocks. Should you follow the money? appeared first on The Twelfth Magpie.

More reading

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• Can anything save the Ocado share price?
• 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…

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Admiral Group and Tesco and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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, there are a range of companies operating in a variety of industries that currently yield over 4%. Buying them now could lead to impressive income returns in the long run – especially since many of them trade on fair valuations and offer the potential to deliver rising dividends in the long run.

With that in mind, here are two FTSE 100 dividend stocks that may be worth buying today.

Micro Focus

International software product company Micro Focus (LSE: MCRO) released a positive trading update on Thursday. The business is trading in line with previous guidance, and expects to report interim results that are in line with expectations.

Encouragingly, the collection of aged trade receivables has continued in line with management expectations. It expects its constant currency revenue range for the full year to be between minus 4% and minus 6% when compared to the previous year.

While the company has experienced a challenging period over recent years, it seems to be recovering well under a refreshed strategy. It currently has a dividend yield of 4.3%, which could increase at a brisk pace over the long run as its current strategy is implemented. It has dividend cover of 2, which suggests that a higher dividend could be affordable without putting pressure on the company’s financial standing.

With Micro Focus shares trading on a price-to-earnings (P/E) ratio of 12, they seem to offer good value for money compared to other FTSE 100 companies. As such, now could be a good time to buy them, with there being the potential for a high income return as well as capital growth over the long run.

Admiral

The performance of motor insurance specialist Admiral (LSE: ADM) in recent years has been impressive. The company has been able to raise dividends per share at an annualised rate of 23% over the last three years, and they are expected to rise by a further 23% in the current year.

This puts the stock on a forward dividend yield of 6.4%. Although its payout is made up of ordinary and special dividends, which means it may be less robust than other FTSE 100 dividend stocks, its track record of keeping costs down and offering highly competitive pricing to customers could mean that its prospects are highly attractive.

With Admiral set to benefit from possible changes to the Ogden discount rate on personal injury claims, its bottom line could deliver improved performance over the long run. Although the stock trades on a relatively high P/E ratio of 16 at a time when some FTSE 100 stocks have much lower valuations, its consistent financial performance and the potential for a rising dividend could mean that it is worth buying at the present time.

The post 2 FTSE 100 dividend stocks yielding over 4% I’d buy for my ISA today appeared first on The Twelfth Magpie.

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• Here’s how much second income 100 Admiral shares could deliver in 2026
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Peter Stephens owns shares of Admiral Group and Micro Focus. The Motley Fool UK has recommended Micro Focus. 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, I don’t think Tesco shares are particularly cheap at the moment. On 14 times forecast earnings and with a forecast dividend yield of 3.3% for this year, the price looks about right to me. It’s also worth remembering that you can get a 4.4% dividend yield by buying the FTSE 100, without the risk of owning individual stocks.

If you’re already in Tesco, I’d sit tight. But here are a few stocks I’d consider to boost your dividend income and help diversify your portfolio.

A long-term winner

Motor and home insurer Admiral Group (LSE: ADM) is a well-known name that’s been a star investment for long-term shareholders. The Admiral share price has doubled since 2013 and risen eight-fold since the group’s flotation in 2004.

The firm’s insurance business model allows it to hold less cash than some rivals. This means the company has generated a return on equity of about 50% for at least the last five years. That’s an outstanding level of profitability, far better than most peers.

Strong management has guided the group to steady growth, making Admiral a cash machine for shareholders. Annual dividends have often equalled an entire year’s profits.

The shares looked expensive to me earlier this year. But the stock’s recent retreat has pushed the forecast dividend yield for 2019 up to 6.4%. At this level, I’d rate Admiral as a buy.

Profit from packaging

Another FTSE 100 firm I rate highly is packaging group Mondi (LSE: MNDI). Like Admiral, Mondi enjoys high profit margins.

The group generated a return on capital employed of 18.7% last year. That means £187 of operating profit for each £1,000 of capital tied up in the business. That’s a good performance for a capital-intensive manufacturer, in my view.

The shares fell sharply in the market sell-off at the end of last year, and have yet to recover. But the business still seems to be trading well. Underlying profit during the first quarter was 6% higher than in the final quarter of last year, and the company says net debt fell during the quarter.

Analysts expect Mondi to generate earnings of €1.85 per share in 2019, putting the stock on a forecast price/earnings ratio of about 10. The dividend yield of 4.1% should be comfortably covered by earnings. I rate this stock as a buy at current levels.

A takeover opportunity?

Mining group Anglo American (LSE: AAL) is the smallest of the big three diversified miners listed in the FTSE 100. It’s also the only one with heavy exposure to the platinum mines of South Africa.

The group’s exposure to Africa attracts mixed opinions. Rival mining tycoon Anil Agarwal, who controls a 20% stake in Anglo American, is said to believe the firm should be investing more in Africa. On the other hand, Anglo boss Mark Cutifani has avoided expansion in Africa. Instead, he recently committed billions of dollars to a new copper mine in Peru.

Rumours persist that Agarwal will stage a takeover bid for Anglo. In the meantime, the miner’s shares don’t look too expensive to me, on nine times earnings and with a very affordable 4.7% yield. I think further gains are possible.

The post 3 FTSE 100 dividend stocks I’d buy that pay more than Tesco shares 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

Roland Head owns shares of Tesco. The Motley Fool UK has recommended Tesco. 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.

One of the oldest holdings in my portfolio is FTSE 100 insurance giant Aviva (LSE: AV). I’ve bought more shares on several occasions in recent years, most recently at the start of this year, when I thought the shares were simply too cheap.

I keep buying because, over the last five years or so, Aviva’s management has done exactly what it promised to do. Focus on fewer, larger operations. Cash flow has improved and debt has been repaid. Shareholders have benefited from a rising stream of dividends.

For much of this time, the share price has remained weak, resulting in very attractive dividend yields. For example, my most recent purchase came with a yield of 8%.

Surely something’s wrong?

Such high dividend yields are often a sign of problems to come. There are certainly a few clouds on the horizon. Brexit is one risk, although I don’t think it’s likely to cause too much disruption.

A more serious concern is that Aviva has been without a chief executive since October. As my colleague Rupert Hargreaves explains, investors are unlikely to give the company much love while it lacks leadership.

Despite these risks, my policy is to continue holding dividend stocks such as Aviva unless I can see evidence of serious problems. I’m sure a new CEO will be appointed in due course. In the meantime, the shares are trading on 7.1 times 2019 earnings, with a forecast yield of 7.8%. I think that’s too cheap.

Investors do love this stock

One insurance company that is loved by investors is motor and home insurer Admiral Group (LSE: ADM). The share price has risen by about 190% over the last 10 years. One reason for the group’s outstanding performance is that it’s unusually profitable.

For example, Aviva reported a return on equity — a measure of profitability for financial firms — of 12.7% during the first half of 2018. That’s respectable, but not amazing.

In contrast, Admiral generated a return on equity of 54% during the same period. This very high level of profitability is partly down to the company’s business model. It outsources the risk of many of its insurance policies to other insurers, in return for a fixed payment. The advantage of this is that it reduces the amount of capital needed to be held by the firm. In turn, this frees up a lot of cash for dividends.

The company’s dividends are certainly a huge draw for investors. In most years, the firm pays out more than 90% of earnings in the form of dividends. For example, last year it paid 114p to shareholders from total earnings of 117.2p.

The right time to buy?

I think it’s fair to expect Admiral shares to trade at a higher valuation than less profitable rivals. But I’m starting to think the shares look quite fully priced. Forecasts for 2019 put the stock on a price/earnings ratio of 16.4 with a dividend yield of 6.1%.

I believe Admiral is a great business. But at this price, I’d rate the stock as a hold rather than a buy.

The post Forget the cash ISA. I’m collecting 7.1% from this FTSE 100 dividend stock appeared first on The Twelfth Magpie.

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Roland Head owns shares of Aviva. 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.

If you own shares in good businesses and don’t need the money for a few years, there’s usually no reason to worry. Holding your nerve can be tough, though.

In my experience, one thing that makes it easier to sit tight in volatile markets is a reliable dividend. Receiving regular cash payments in your bank account is a useful reminder that the business in which you’re invested is still operating as usual, regardless of what’s happening in the stock market.

Today, I’m going to look at two dividend stocks with yields of about 6% that I’d be happy to buy today.

Walking ahead of the market

Budget footwear retailer Shoe Zone (LSE: SHOE) gained around 10% this morning after announcing that profits for the year ending 30 September would be ahead of expectations. Strong sales, and the closure of loss-making stores, means that management expects pre-tax profit to be “in excess of £11m”, compared to £9.5m last year.

The group’s year-end net cash balance was £15.7m, £4m of which will be used to fund a special dividend for shareholders next year. I estimate this to be worth 8p per share, equivalent to a 4% dividend yield, on top of the stock’s regular yield of 5.6%.

Skilled operators

It’s worth point out that although this firm’s brand is associated with the cheap end of the market, its operations and financial performance suggest expert management to me.

By operating a store estate with low fit-out costs and short leases, the company has avoided being lumbered with costly loss-making stores.

By sourcing most of its own stock directly from factories overseas, Shoe Zone generates an impressive return on capital employed of around 25%.

By maintaining a debt-free balance sheet, strong cash generation is fed back directly to shareholders. Perhaps this is no surprise — 50% of the shares remain in the hands of directors Anthony and Charles Smith.

After today’s gains, I estimate that the stock trades on about 10.5, with an ordinary dividend yield of around 5.7%. I’d buy.

A 6% yield from the FTSE 100

If your focus is on big-cap stocks, then you might be interested in FTSE 100 motor insurer Admiral Group (LSE: ADM). This company has made a name for itself with investors thanks to long-term growth and generous special dividends in most years.

Like Shoe Zone, I believe Admiral’s execution of its business model is superior to some of its rivals.

The group partners with other insurance firms to share the risk on its customers’ policies. Doing this reduces the amount of capital Admiral needs to set aside to meet potential claims.

In turn, this means that the firm generates a lot of spare cash and a very high return on equity — a key measure of profitability for insurers.

Last year for example, the group’s full-year dividend represented 97% of earnings per share. Admiral’s return on equity for 2017 was 55%, which is roughly double the return earned by rivals Esure and Hastings.

Admiral’s share price has pulled back from recent highs of more than 2,100p. At about 1,950p, the stock trades on 16 times forecast earnings with a yield of 6%. I’d be a buyer at this level.

The post Two 6% dividend stocks I’d buy ahead of a FTSE 100 rebound 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

Roland Head 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.

While things certainly look peachy, I’m not sure I’d build a position now. Here’s why.

Frothy valuation

With CEO David Stevens talking of “substantial growth across almost all our businesses”, you know the numbers are going to be pretty good. And it proved to be the case. 

At £1.66bn, turnover was up 14% in the first six months of the year compared to over the same period in 2017. The total number of customers on the company’s books grew by the same percentage, to 6.23m, by the end of June.

Separated out, UK customer numbers rose 17% to a little over 5m. With over 4m cars now covered, Admiral reported an 11% rise in motor profits to £249.5m. The only fly in the ointment was a £1.9m loss at the company’s Household arm due to “weather events“.

Admiral’s International Insurance businesses also performed decently with customer numbers up 17% to 1.12m. A loss of £600,000 may still disappoint some but this was far better than the £10.1m recorded the year before. 

This performance, when combined with the continued success (although relatively small contribution) of Admiral’s price comparison business, led the company to report a 9% rise in group share of pre-tax profits to £211.7m.

Income investors will also be happy. Having announced a 7% increase to the interim dividend (to 60p per share, which includes a special payout of 19.2p), it seems likely the company will yield the massive 5.7% expected by analysts in 2018.

So, what’s my issue with Admiral? In a word, ‘valuation’. At 16 times forecast earnings before today, the stock already looked pricey compared to peers. 

Admittedly, this premium can be justified. The company’s return on equity and operating margins are consistently high, even if the former slipped slightly over H1. What’s more, its finances look in good order, with a net cash position of £103m at the end of 2017.

Nevertheless, I don’t think investors should get carried away. While further growth (and share price gains) are possible, the competition Admiral faces, coupled with the potential impact of a ‘no deal’ Brexit, make me more inclined to shop around for value in the sector. Speaking of which…

Better value

With its share price almost 20% lower than at this time last year, things haven’t been so great for holders of stock in £1.7bn cap Hastings Group (LSE: HSTG). This does, however, leave the company’s stock on a far more compelling valuation of a little less than 12 times earnings. 

There are also indications that its fortunes may be turning. Last week’s interim results revealed a 9% rise in net revenue and stonking 22% increase in adjusted operating profit. Encouragingly, management also appeared confident in the company’s ability to meet expectations for the full year. 

In addition to the recent improvement in trading, Hastings is also likely to yield of 5.2% in 2018, rising to 6.5% in 2019. Although these payouts aren’t massively different to those offered by Admiral, the extent to which they are covered by profits appears better, at 1.7 and 1.5 times respectively. 

So, while I still rate both companies, Hastings gets my nod at the current time.

The post This cheap FTSE 250 dividend stock looks a better buy than Admiral 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

Paul Summers 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.

In fact, one stock in the index currently has a 6% dividend yield and is expected to deliver further dividend growth in future. Alongside another high-yielder which is listed outside of the FTSE 100, now could be the perfect time to buy it for the long run.

High dividends

The company in question is motor insurance specialist Admiral (LSE: ADM). It has a solid track record of dividend growth. In the last two years it has increased dividends per share by 63%, with it paying out 184.2p per share in dividends in the 2016 and 2017 financial years combined. At its current share price, this would work out as an annualised dividend yield of around 4.7%. However, with dividend growth ahead over the coming year and next year, it offers a significantly higher yield than the FTSE 100.

In fact, Admiral is expected to raise dividends per share by 15.6% this year, followed by further growth of 8.2% next year. As such, its dividend yield for the current year is due to be 5.7%, with this figure set to rise to 6.1% in 2019. As such, it offers a dividend yield that is around 50% higher than that of the FTSE 100. And with its business model continuing to be highly successful in what remains a competitive industry, the prospects for further dividend growth beyond 2019 seem to be favourable.

Improving outlook

Also offering an impressive income outlook is employee services provider Personal Group (LSE: PGH). The company released a positive trading update on Friday which showed that it has made a good start to the year and is performing in line with management expectations. All three of its business segments are performing ahead of the same period of last year, with its salary sacrifice business also delivering encouraging performance.

Looking ahead, the company is expected to deliver a rise in earnings of 5% in the current year, followed by further growth of 9% next year. It remains upbeat about its future prospects according to its recent update, while a focus on rationalising its supply chain could help to make it more efficient over the medium term.

With a dividend yield of around 4.8%, Personal Group could offer an impressive income outlook. It has a sound track record of growing dividends. In the last four years they have risen at an annualised rate of 5.1%. Further growth which is ahead of inflation could be on the cards for the company, which may make it more appealing for income-seeking investors.

The post This FTSE 100 dividend stock could help you to quit your job 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

Peter Stephens owns shares of Admiral Group. 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.