The FTSE 100 is a paradise for investors seeking passive income shares. Packed with highly cash generative, market-leading companies in low-growth industries, it’s the perfect place to go shopping for dividend stocks.
The Footsie‘s stunning performance in 2025 has pulled the average dividend yield down to 3.1%. However, that remains inside the long-term range of 3% to 4%. And it’s still above what dividend investors can expect from almost all other major stock indexes.
Savvy investors can get even better returns with just a little research. Admiral Group (LSE:ADM), M&G, and Legal & General are three UK stocks whose high dividend yields are well advertised by City analysts.
So what makes them such excellent dividend shares?
Spectacular growth
Admiral slashed the annual dividend in 2022 as rising motor claim costs smashed profits. But since then, the insurance giant’s rebuilt its income credentials by supercharging dividend growth and delivering a raft of special dividends.
City analysts expect ordinary dividends to keep rising over the next three years at least. So for 2026, this leaves Admiral shares with a hefty 7.1% dividend yield.
There’s a good chance in my view of further special dividend yields next year given the insurer’s cash-rich balance sheet. Its Solvency II capital ratio was an enormous 194% as of June.
Can it continue paying market-beating dividends over the longer term? Though it faces competitive pressures and potential regulatory hurdles, I think it can.
Even if consumer spending falters, its leading role in the stable general insurance market should drive further growth. I’m especially encouraged by its position as the UK’s largest motor insurer (its market share is roughly 15%).
9% dividend yield
M&G and Legal & General offer even larger dividend yields than Admiral. For 2026, these stand at 7.8% and 9% respectively.
Like Admiral, these financial services providers also face severe competition. But this is not all — exposure to cyclical sub-sectors like asset management, life insurance, and pensions means they’re also more vulnerable during economic downturns.
However, they have one large advantage. The segments they specialise in are tipped for spectacular growth over the next two-three decades, driven by ageing populations in their markets and the rising importance of financial planning.
This could, over time, lead to dividend yields that continue to smash the broader FTSE 100 (Legal & General shares currently have the index’s biggest yield for 2026). It also means they may remain two of the UK’s best dividend shares when it comes to steady and sizeable dividend growth.
In the meantime, I’m confident both companies can meet the City’s strong dividend projections for next year. This is because, like Admiral, both companies have deep balance sheets to help them maintain their generous dividend policies.
M&G’s Solvency II ratio is 230%, while Legal & General’s sits just a little further back, at 217%.
I own Legal & General in my own FTSE 100 portfolio. I’ll consider adding Admiral and M&G when I next have spare cash to invest.
