When aiming for long-term passive income, many investors consider dividend shares with yields of 7% or above. But without assessing where the dividends are heading, that long-term income might quickly become short term.
Currently, three of the UK’s most popular high-yielding income shares are Legal & General, Phoenix Group, and Admiral Group (LSE: ADM). For those hunting dividend income, these three gems offer some seriously attractive yields — significantly above the FTSE 100 average.
Here’s what the forecasts suggest for the next three years.
Slow but steady growth
All three companies are expected to deliver steady dividend growth, albeit nothing spectacular. We’re looking at around 2% to 3% annual increases, meaning income will tick up gently but may fall behind inflation. That’s worth noting if you’re relying on dividends to fund your lifestyle.
What’s really interesting is that all three maintain exceptionally high dividend yields: 9.6% for Legal & General, 9% for Phoenix, and 7.2% for Admiral by 2027. Compare that to the typical FTSE 100 average of 3% to 4%, and you’ll see why these stocks appeal to income investors.
L&G’s dividend coverage looks tight at 1.1x earnings but this is typical for insurers with a lot of earnings in non-cash items. Similarly, Phoenix’s coverage looks thin but is supported by £5.6bn in cash reserves.
Admiral, by comparison, has fairly decent earnings and cash coverage.
| Stock | 2025 dividend | 2027 dividend | 2027 yield |
|---|---|---|---|
| Legal & General | 21.8p | 22.7p | 9.55% |
| Phoenix Group | 55.5p | 58.7p | 9% |
| Admiral Group | 205.7p | 222.9p | 7.2% |
Let’s take a closer look at Admiral Group, a stock I feel has the most reliable forecast.
A growth hero
I think Admiral’s the star performer here. Dividends are forecast to jump from 205.7p to 222.9p by 2027, with stronger growth of around 7% to 8%. True, the 7.2% yield is lower than the others, but that’s precisely why I think it’s safer.
2024 was a great year for the company, with earnings doubling to £839m. And despite a tougher market in 2025, it continued to do well. However, with dampened prices and stiff competition in the UK motor insurance market, it faces risks going forward. A deeper-than-expected economic downturn in 2026 could put serious pressure on margins and hurt the share price.
Fortunately, the payout ratio sits at a comfortable 65%, giving much more breathing room than the other two. Even if the insurance market cools further, Admiral could trim dividends without crisis mode kicking in.
The bottom line
All three companies offer notably higher yields than FTSE 100 averages, reflecting their cash-strong positions in the financial services sector. Interestingly, their yields are inverse to their earnings growth potential, with Admiral offering the strongest fundamentals for sustainable dividend expansion.
I plan to continue holding all three stocks as part of a long-term passive income portfolio. However, for new investors, Admiral Group currently looks like the most compelling option to consider.
Realistically, a mix of all three provides diversification, a strong yield average, and reasonable growth. While the overall dividend growth may fail to outpace inflation, the potential returns are significantly higher than the interest on a standard savings account.
