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The FTSE 100 has started 2026 in the same direction it has headed for five straight years — higher. Yet most Footsie stocks still offer a much higher dividend yield than your average S&P 500 company.
Here, I’ll spotlight two shares that are worth checking out for passive income.
Pharmaceuticals
Let’s start with Hikma Pharmaceuticals (LSE:HIK), which makes generic drugs for markets across North America, Europe, the Middle East, and North Africa. These are medicines that contain the same active ingredients as a branded drug, but can be sold more cheaply because the original patent has expired.
As we can see below, the share price hasn’t performed well in recent years. However, this has pushed the forward-looking dividend yield to 4.1%. This is significantly higher than its five-year average.
I find this attractive because Hikma is solidly profitable and the payout is covered nearly three times over by forecast earnings. In theory, this leaves plenty of room for dividend increases moving forward.
One thing that could drive future revenue and earnings growth for the company is generic GLP-1 weight-loss drugs. The patents for these will soon start expiring in many developing markets around the world.
According to Grand View Research, the global GLP-1 receptor agonist market is projected to reach more than $200bn by 2033, up from $70.1bn in 2025.
However, not every firm can copy these injections due to the technical complexity of the manufacturing process. Hikma, though, is already a global player in sterile injectables, so appears very well-positioned to pick up a fair slice of the action.
It’s worth noting that the average analyst price target here is 2,216p, which is around 42% above the current price. While such targets (and dividends) are never assured, it’s a steep mismatch for a FTSE 100 stock.
Finally, the stock is trading cheaply right now, with a forward price-to-earnings ratio of just 8.9.
Insurance
Next up is car insurance giant Admiral (LSE:ADM), whose share price has slumped 28% since August. On paper, this leaves the stock offering a tasty forward yield of 8%.
However, a stock rarely loses more than a quarter of its value in six months for no reason. And in Admiral’s case, it has been cutting the price of its insurance policies to stay competitive.
While that’s great for drivers, and should help it retain many of its 11m customers (myself included), it might mean a period of softer earnings growth. Car insurance is a very competitive market, after all, and switching costs are low.
Meanwhile, Admiral is changing the way it funds its employee share scheme. This is likely to result in lower special dividends for a period, which casts a bit of doubt over the 8% forecast yield.
However, the insurer’s normal dividend will still come from 65% of post-tax profits, with any surplus distributed on top. And Admiral’s competitive advantages, which are based on better data and technological capabilities than rivals, remain intact.
As such, I regard this as a top high-yield dividend stock to consider for passive income, despite some near-term uncertainty.
