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Have £5,000 to spend? I’d buy this FTSE 100 dividend stock in an ISA

Market makers have breathed a sigh of relief as widespread panic smashing stock exchanges has moderated. FTSE 100 investors still need to be prepared for a fresh leg in the recent stock market crash, of course. Market confidence remains extremely fragile and global infection rates (and particularly those in the US) continue to swell.

Still, investors with a long-term goal in mind shouldn’t get too flustered. Market volatility is nothing new and studies have shown that, over the space of 10 years or more, stock pickers can expect to make an annual average return of up to 10% even including periods of extreme movement.

Great picks

I recently explained why HSBC and Bunzl are a couple of brilliant buys from the FTSE 100. Their profit outlooks for this decade and beyond remain quite compelling. And following recent share price weakness they look too good to miss to me. They’re not the only brilliant blue-chips I think long-term investors need to consider stocking up on though.

Admiral Group (LSE: ADM) is another I’d happily spend my investment pounds on. Pre-tax profits boomed 10% in 2019 to breach the £500m marker for the first time (at £526.1m to be exact) and I expect them to continue surging.

The FTSE 100 insurance giant said “unusually high UK motor reserve releases that resulted from improved reserve estimates across a number of years” helped supercharge the bottom line. Admiral added that it expects more “significant” releases in 2020.

Stack of new bank notes

A FTSE 100 firecracker

These are welcome items, of course, though for long-term share pickers they clearly aren’t the be-all-and-end-all. What makes the FTSE 100 company such a brilliant buy is its growing might in the broader motor insurance arena. Not just in the UK but in foreign climes too.

Admiral added another 470,000 customers to its books in 2019. Its UK insurance unit saw motor, household and travel members rise 4% year on year to 5.48m. However, the insurer’s international motor units really hogged the limelight last year. Customer numbers here surged 16% to 1.42m, helped by changes to its Rastreator price comparison operations in Spain and the creation of a dedicated broker channel.

Another thing to celebrate is that premiums have started rising again from around the middle of last year. They should continue doing so as more and more market players get in on hiking prices for customers. An added bonus is that cost inflation, while still at the peak of the 3% to 5% historic range, looks set to start retreating too.

A dividend star

Admiral didn’t just impress on the profits front either. Its strong balance sheet meant that the annual dividend was hiked 11% to 140p per share.

What’s more, this FTSE 100 share — unlike many other blue-chips — has resisted bringing the axe down on dividends in response to the Covid-19 crisis. Things can change of course, but right now City analysts are expecting the chunky payments to keep on coming. And this results in a mighty 5.7% yield for 2020.

A forward P/E ratio of 17 times isn’t quite a showstopper. In my opinion though, this is a reasonable figure given its rising influence at home and abroad and improving market conditions. I’d happily buy Admiral in an ISA today and hold it for years.

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Royston Wild owns shares of Bunzl. The Motley Fool UK has recommended Admiral Group and HSBC Holdings. 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.