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Smart investors are always on the hunt for stocks that can plump up their Stocks and Shares ISA with juicy dividends.
While plenty of names in the FTSE 100 and FTSE 250 offer steady income, I’ve been running the numbers on two that stand out. Both provide above-average yields, both look relatively cheap, and both could fit nicely into a long-term income portfolio.
The names in question? Insurance stalwart Admiral Group (LSE: ADM) and interdealer broker TP ICAP (LSE: TCAP). On the surface, they look equally tempting, but which one comes out on top?
Admiral Group
Admiral’s about as dependable as it gets in UK insurance. The company’s been selling cover since 1991 and is now firmly embedded in the FTSE 100. Its stock’s had a cracking 2025 so far. After posting upbeat interim results on 14 August, shares surged 3.3% to a record high of 3,470p and are now up 36% year to date.
Profits are equally strong. Pre-tax profit rose 67% year on year, powered by competitive pricing and an impressive performance in its UK motor business. Analysts are starting to take notice too. Last Thursday, RBC lifted its target price for Admiral from 3,800p to 4,100p.
As for dividends, they remain a major attraction. The current yield’s a juicy 5.66%, with a payout ratio of 87.4%. Payments have been uninterrupted for 20 years and have grown 86.4% year on year. That’s exactly the sort of consistency I like to see.
Valuation’s a little less appealing. The forward price-to-earnings (P/E) ratio sits at 15.6, which is higher than the market average, while the price-to-book (P/B) ratio looks downright frothy at 7.7. Debt coverage is also thin. Admiral’s still an attractive dividend machine, but an investor is clearly paying a premium.
TP ICAP
TP ICAP might not be a household name, but it’s a vital cog in global financial markets. The FTSE 250 firm specialises in interdealer brokerage, working with banks to facilitate trades across interest rates, credit, derivatives, foreign exchange, and swaps.
The share price has been steadier than Admiral’s, up 7.8% this year. Results have been mixed though. In early August, it reported weaker-than-expected first-half operating profit of £189m, sending shares down 8.1%.
Dividends however look rock-solid. TP ICAP currently yields 5.8%, with a payout ratio of 70.1%. It has 20 years of uninterrupted payments, and dividends grew 8.8% year on year. Coverage looks slightly stronger than Admiral’s.
Valuation is where things get interesting. With a forward P/E ratio of 8.7 and a P/B ratio of just under 1, the stock appears relatively inexpensive compared to its peers. Debt coverage is sufficient too, giving it a sturdier balance sheet than its rival.
My verdict
On paper, Admiral looks like the stronger performer right now. Earnings growth is impressive and analysts are still raising targets. However, the stock’s pricey, and that could limit future growth.
TP ICAP’s healthier on valuation so it’s still worth considering, but weaker results leave a question mark hanging over short-term performance.
I already own shares in TP ICAP but after crunching the numbers, I’m leaning towards Admiral as the better option for a Stocks and Shares ISA. In fact, I plan to pick up a few shares next month.
