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Two dividend shares I believe could be savvy additions to any portfolio looking to boost passive income are Admiral Group (LSE: ADM) and Central Asia Metals (LSE: CAML). Although dividends are never guaranteed, here’s why I believe investors should consider buying the shares.
Admiral Group
Admiral is one of the biggest car insurance businesses in the UK with an international presence. Some of its best known UK brands include Diamond and Elephant.
Admiral’s share price has had a positive 12 months, up 23%. The shares are trading for 2,320p as I write, whereas at this time last year, they were trading for 1,883p.
Admiral shares currently offer a dividend yield of 4.4%, higher than the FTSE 100 average of 3.9%. It had to slash dividends last year, as many other stocks did, due to macroeconomic and sector volatility linked to soaring inflation. Although forecasts don’t always come to fruition, I’m buoyed to see that City analysts reckon the dividends should grow again.
Speaking of inflation, it has placed massive pressure on the motor industry, especially car insurance. Premiums are soaring, margins and profits are being trimmed down, and these profits underpin investor returns.
Despite this, car insurance is a must, offering Admiral a defensive element. Through its multiple brands, it has a good market presence. I’ve previously insured some of my vehicles through its businesses. Furthermore, first-half 2023 results were encouraging, where revenue and pre-tax profits rose by 21% and 4%, respectively.
The cost-of-living crisis could continue to place pressure on Admiral’s performance and profits, which could hinder payouts. I view this as a shorter-term issue and I’m an advocate for long-term investing, which I would define as a five to 10-year period. With that in mind, I believe Admiral shares would be ideal as part of a diverse portfolio of dividend shares to boost any portfolio.
Central Asia Metals is a zinc, copper, and lead mining business with operations in Kazakhstan and North Macedonia.
Trading for 183p as I write, Central shares were trading for 218p at this time last year, equating to a 16% drop over a 12-month period. I’m not worried here, as many dividend shares I’m targeting have fallen in recent months due to macroeconomic struggles. In fact, this drop in share price makes the shares look more attractive to me.
The commodities Central mines are tipped to skyrocket in demand as they are integral for the green revolution. This includes renewable energy as well as electric vehicles. Increased demand should translate to boosted profits and returns.
At present, Central shares look great value for money on a price-to-earnings ratio of just five. In addition to this, a dividend yield of 10% is enticing.
The risk with Central is that commodities and their fate are linked closely to the economy. With macroeconomic issues, there could be some turbulence here for the business. Plus, mining operations often encounter operational issues that can impact production, performance, and payouts.
Overall, I believe Central Asia Metals could be a great option to boost passive income over the long term. The green revolution is only ramping up, and it is in a great position to capitalise and reward shareholders too, in my opinion.
