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One FTSE 100 6% yielder I’d buy today

A stable backdrop in the UK car market makes me believe that Admiral Group (LSE: ADM) should keep on doling out gigantic dividends.

Sure, the insurance leviathan may be hit by increasing competition that is taking a bite out of its business, but the market still remains full of revenue opportunities as premiums steadily rise across the industry.

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Besides, Admiral’s attempts to diversify away from its core UK motor market offer the potential for explosive earnings growth in the years ahead. Indeed, the business is steadily gaining share in the home insurance market, while it is also making waves in the motor market across Europe (combined turnover across its overseas territories leapt 39% during January-June).

And in the longer term, the US could prove a very happy hunting ground for Admiral.

Big yields

But those seeking electric earnings growth need not wait long. Admiral is predicted to deliver a 43% earnings advance in 2017 (a further 3% rise is predicted for next year).

These figures mean that the insurer sports a forward P/E multiple of 17.3 times and a sub-1 PEG readout of 0.4, making it a popular pick for value investors. But it is in the dividend stakes where the FTSE 100 star really makes an impact.

A predicted 107.4p per share dividend yields a market-beating 5.5%, while the 112.1p payout anticipated for next year drives the yield to 5.8%.

Packed with value

Those on the hunt for mountainous dividend yields also need to pay Telford Homes (LSE: TEF) close attention, in my opinion.

The environment remains extremely favourable for the country’s listed housebuilders thanks to the UK’s enormous supply/demand imbalance. As Telford Homes commented late last month: “The structural shortage of homes to buy and rent in non-prime areas of London continues to underpin [our] longer-term growth plans.”

And the firm has a juicy £1.4bn development pipeline, comprising 4,200 homes, to be delivered over the next several years to allow the AIM stock to capitalise on this shortage.

City analysts certainly do not see any deterioration in the UK housing market despite toughening economic conditions. Far from it — Telford Homes for one is expected to generate handsome earnings growth of 29% in the year to March 2018. And an extra 18% advance is predicted for next year.

So it is also unsurprising that dividends are expected to keep springing higher at the Essex firm. Fiscal 2017’s 15.7p per share payment is anticipated to rise to 17p this year, and again to 18.7p in the following period. As a consequence, yields stand at a mighty 4.1% for this year and 4.5% for next year.

And share pickers can look to bulky dividend coverage of 2.8 times for this year and three times for fiscal 2019 as reason to believe in these figures.

With Telford Homes carrying a forward P/E ratio of just 8.8 times, not to mention a corresponding PEG multiple of 0.3, the housing giant should also be given serious consideration from value investors hunting big dividends.

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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.

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