5.5% yields! Here’s the dividend forecast for Admiral shares for 2023 and 2024

 Yield 5.5%! Here is the dividend forecast for Admiral stock for 2023 and 2024

And it will be even better for next year. The dividend yield at that time is 5.5%. But how realistic are the current predictions? And should I buy a motor insurance giant for my stock portfolio? Like the share price, Admiral's dividend record has been very patchy recently. The business has a long history of payout growth, fueled by a combination of juicy regular and special dividends. In 2021, total dividends jumped 78% year-on-year to 279p per share, with the sale of its Penguin Portals unit generating an additional 92p dividend at the time.

But dividends fell to 157p a share last year - even after special liquidation-related payments - as soaring costs caused profits to collapse. Ordinary dividends fell to 112p from 187p for the period. City analysts expect total dividends to fall again to 117p in 2023. However, they should rise to 127.7p per share in 2023 as profits rise again.

Admiral's decision to reduce total dividends by 15% for the first half of 2023 to 51 pb underlines the pressure that persists in the company. The ordinary dividend fell to 38 pp from 44.2 pp a year earlier. The Solvency II indicator of the insurance company fell by 3% to 182% in the first half of the year. That – along with a weak 1.1x dividend coverage for the next two years – casts a shadow over current dividend forecasts in my view.

Is Admiral stock a buy?

However, Admiral's solid first-half performance provides signs of encouragement. January-June sales jumped 21% to £2.24bn, which in turn pushed pre-tax profit up 4% to £233.9m. This reflects pricing actions the company has taken to offset high claims inflation. Prices for new business and policy renewals in the main motor unit were up 20% in the first half. That said, as a potential investor, I worry about whether the business can sustain this momentum. There's only so far premiums can go up during this cost-of-living crisis before policies become unaffordable.

The high level of competition means that consumers also have plenty of opportunities to shop around for a better deal. The news that overall motor policies fell by 7% at Admiral in the first half is a warning of the damage that price increases can cause.

At the same time, high cost inflation continues to push the admiral. The company estimates engine claims inflation at 10% for 2023. And the problem could remain beyond that as shortages of mechanics, auto parts and new vehicles drag on. The risk of buying Admiral shares now remains significant. And I don't believe that's reflected in the company's 18x forward P/E ratio. Despite the high dividend yields, I'd rather buy other stocks for passive income.

Of course, past performance is no guarantee of future results. However, we think it is now stronger than ever. Surprisingly, you may never have heard of this company.Still, there's a 1 in 3 chance you've used one of her 250 brands. Many are household names with millions of monthly website visitors, often helping consumers compare items, shop and save. Now that the “cost of living crisis” is biting, we believe its impact could be on the rise. And that could bring immediate new profits to investors who are in position today. So please don't leave without reporting FREE,

has no position in any of the listed stocks. Motley Fool UK recommended Admiral Group Plc. The opinions expressed about the companies mentioned in this article are those of the author 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 does

In the investment world, dividend yields play a key role in attracting savvy investors looking for stable income streams. Admiral stock has gained attention for its impressive dividend yield forecast of 5.5% for 2023 and 2024. This article dives into the dividend forecast for Admiral stock, examines the reasons for its strong yields, and provides information for investors looking to optimize their returns.

Admiral Shares Dividend Forecast Explained:

Renowned for its consistent performance, Admiral stock has forecast an attractive dividend yield of 5.5% for 2023 and 2024. This projection raises eyebrows as it suggests the potential for robust investment returns. As investors look for ways to secure their financial future, these dividend yields are the promise of reliable income in uncertain times. Admiral stock, dividend forecast, 5.5% yield, 2023 and 2024, return on investment, financial future.

Factors driving Admiral's strong returns:

Several factors contribute to the impressive dividend yields of Admiral shares: Profitability: Admiral stock's solid financial performance supports its ability to maintain high dividend payouts. As a company's profits grow, so does its ability to distribute dividends to shareholders.

Stable market position: Admiral's established position in its industry increases investor confidence. A stable market presence often translates into consistent returns and subsequently reliable dividend payouts. Dividend policy: The proactive dividend policy of Admiral shares favors consistent payouts. This approach attracts income-oriented investors who appreciate the predictability of regular dividends.

Effective management: Sound financial management practices enable Admiral to effectively allocate funds and support dividend distribution without compromising operational needs. profitability, market position, dividend policy, effective management, reliable dividends.

Investors looking to capitalize on the attractive dividend yields of Admiral shares may consider the following strategies: Diversification: Including Admiral shares in a well-rounded investment portfolio can improve diversification, reduce overall risk exposure while maintaining a healthy income stream.

Long-term perspective: Patience can be rewarding. Investors who are willing to hold Admiral shares for the long term can benefit from compounded returns, leading to substantial wealth accumulation. Reinvestment: By reinvesting dividends, investors can harness the power of compounding and accelerate the growth of their investment over time.

Regular monitoring: Staying informed about Admiral stock performance and market trends allows investors to make timely decisions and optimize their dividend strategy. investment portfolio, diversification, long-term perspective, compound returns, reinvestment, market trends.

Admiral's projected 5.5% dividend yield for 2023 and 2024 represents an attractive opportunity for investors looking for reliable sources of income. By understanding the factors driving these high returns and adopting effective investment strategies, investors can potentially maximize their returns while mitigating risk. As always, prudent research and a long-term approach remain essential to making informed investment decisions in pursuit of financial prosperity. investment strategy, maximizing returns, mitigating risks, informed investment decisions, financial prosperity.