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I’d buy this 7%-yielding FTSE 100 dividend stock today!

After the recent market declines, there’s a whole range of FTSE 100 dividend stocks available to investors that yield more than 5%. So when it comes to blue-chip income, investors are spoilt for choice. Indeed, some of these companies offer dividends of 7% or more.

Here’s just one of these FTSE 100 dividend champions that looks undervalued after recent declines.

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FTSE 100 dividend income

Insurance group Admiral (LSE: ADM) has earned its reputation as one of the FTSE 100’s top income stocks. Every year, the company pays out almost all of its earnings from operations to shareholders. A combination of regular and special dividends make up the total payout.

By offering a combination of a regular and special dividend, management has the flexibility to vary the payout. It can maintain the regular distribution while cutting the special dividend to retain cash.

Still, despite the FTSE 100 dividend champion’s income credentials, shares in the business have plunged since the beginning of the year. Following this decline, Admiral’s dividend yield has spiked. It currently stands at around 7%. The FTSE 100 average is 4.8%.

Recent trading updates from the UK’s largest insurance company suggest these declines are unwarranted. Last week, the company reported a record set of results, with its UK insurance business performing better than expected. Meanwhile, reduced losses helped improve reserve releases, unlocking additional cash.

Growth ahead

One of the most impressive things about Admiral is its growth potential. The FTSE 100 dividend star has several growth initiatives underway at present. These include the expansion of its personal loans business, its international insurance businesses and comparison website.

Of these three, the comparison website, Confused.com, is the only division that’s currently profitable. However, in the past two or three years, growth at the personal loans business and international insurance operation has exploded. These two divisions should start contributing to the group’s bottom line in the next few years.

Admiral’s expansion should help the company outperform its peers. The UK insurance market is relatively developed and highly competitive. As such, growth is hard to come by. By expanding into other lines of business, the FTSE 100 dividend stock can outgrow its peers, which could push down overall group costs.

Lower costs will allow the business to offer customers better deals, cementing its position as the UK’s largest car insurance business.

The bottom line

Investors have rushed to sell shares in Admiral over the past week or so due to concerns about the impact the Covid-19 outbreak might have on operations. However, Admiral is unlikely to see a sustained drop off in demand for its services as car insurance remains a legal requirement in the UK.

This suggests the company should continue to grow and throw off a healthy income stream for shareholders for the foreseeable future. The virus outbreak is unlikely to have a significant impact on Admiral’s overall operations.

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According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

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Rupert Hargreaves owns shares in Admiral Group. The Motley Fool UK has recommended Admiral Group. 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.