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Forget the Santander share price! I’d buy this FTSE 100 dividend champion

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The Santander (LSE: BNC) share price has been under immense pressure this year. Shares in the Spanish banking giant have declined by as much as 44% year-to-date, excluding dividends.

It’s easy to see why investor sentiment towards the lender has soured over the past few months. The coronavirus crisis has ignited one of the most significant economic slumps in history.

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At this stage, it’s impossible to tell how much of an impact this will have on the European banking industry and how quickly the economy will recover in the months and years ahead. 

As such, there could be further pain ahead for the Santander share price. 

Santander share price under pressure 

Some banks around the world have reported a spike in loan losses over the past few months as the coronavirus crisis has wreaked havoc on the global economy. These lenders had to write off tens of billions of pounds in assets as a result. 

The Spanish banking giant is likely to face the same fate, which could have a substantial negative impact on the Santander share price. 

What’s more, the lender may also struggle to return to growth in the years ahead. Before the crisis, Santander was already struggling. Low interest rates have steadily eroded the group’s profit margins over the past decade, and its costs have remained stubbornly high. Unfortunately, interest rates have only fallen further over the past six months. This may make it harder for the Santander share price to recover when the crisis is over.

On the other hand, FTSE 100 dividend champion Admiral (LSE: ADM) appears to have a bright future.

Unlike Santander, the insurance giant doesn’t need high interest rates to make a profit. Moreover, the organisation is built around an online business model, so its costs have always been much lower. 

Avoiding the worst 

Admiral also seems to have been relatively unaffected by the coronavirus crisis. Its customers have been driving less, which means insurance claims have dropped. This may help the company report a better than expected trading result for 2020.

Considering the company’s advantages, it’s no surprise Admiral has outperformed the Santander share price this year. Shares in the group are changing hands at roughly the same level they started the year. 

And, unlike the Santander share price, Admiral also continues to offer a dividend for its investors. The payout for the full year is expected to yield somewhere in the range of 4-5%. 

As such, now would be a great time to sell the Santander share price and buy Admiral instead. Not only does the insurance group offer the potential for higher profit growth in the years ahead, but it also continues to pay investors an extremely attractive dividend.

As the outlook for the Santander share price continues to deteriorate, Admiral may be the better investment for the long term. 

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Rupert Hargreaves owns shares in Admiral. 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.

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