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This 6% yield isn’t the only FTSE 100 dividend stock I’d buy today

It’s no secret that the trading environment for Britain’s car insurance specialists is becoming tougher. Indeed, last time I covered Admiral Group (LSE: ADM) I alluded to the intensifying attack from rivals like Direct Line and eSure that is predicted to put the brakes on earnings growth in the medium term.

Indeed, City forecasters anticipate that earnings will rise just 2% in 2018, slowing considerably from the 49% advance printed last year. And next year, a 7% rise is expected, still some way short of 2017’s blowout result.

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However, for dividend chasers Admiral still has plenty going for it. This year the FTSE 100 insurer is predicted to pay a 112.4p per share dividend, meaning that investors can enjoy a monster 5.5% yield.

And the good news keeps on coming, the 125.3p reward estimated for 2019 driving the yield to 6.1%.

In the fast lane

It isn’t difficult to see why City brokers are so confident that dividends will remain on the right side of ‘generous’ in the wake of Admiral’s half-year report.

Heck, the number crunchers have been busy upgrading their forecasts following last week’s interims. Then the business advised that it had decided to pay an ordinary half-time dividend of 40.8p per share, as well as a special dividend of 19.2p.

Admiral’s pre-tax profit bounce of 9% for the period, to £211m, was enough to encourage it to splash out for shareholders. Not only was it buoyed by its European operations finally bouncing into profit, but its ability to keep on performing in the tough British marketplace also drove the bottom line higher. The number of domestic customers on its books leapt 17% year-on-year to almost 5.1m, it advised.

Despite its rapidly-improving fortunes at home and overseas, however, Admiral can still be picked up on a fairly undemanding forward P/E ratio of 17.2 times. This, allied with the prospect of explosive dividends, makes it a top buy in my opinion.

Dublin dynamo

The insurance colossus isn’t the only great Footsie income stock I’d plump for today, however, thanks to the rate at which Smurfit Kappa Group (LSE: SKG) is likely to keep hiking dividends.

Payouts at the packaging powerhouse have more than doubled during the past half-decade and latest trading details give me the confidence that dividends should keep on rising at a decent lick. Operating profit before exceptional items leapt 48% during January-June, to €529m, as global demand for its products kept surging and efforts to recover costs via price increases continued.

So analysts are forecasting earnings expansion of 63% in 2018 and 2% in 2019, providing a solid enough base for extra dividend growth to be anticipated. Last year’s reward of 88 euro cents per share is predicted to rise to 95 cents in 2018 and again to 100 cents next year, projections that yield a very-decent 2.6% and 2.8% respectively.

A forward P/E ratio of 13.3 times is cheap by conventional metrics, but in the case of Smurfit Kappa, with its strong position in a very favourable market, I reckon it makes the FTSE 100 income star an absolute bargain.

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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.