Could Brexit crush 5%+ yields at GlaxoSmithKline plc and at Admiral Group plc?

The latest polls and betting odds suggest that the outcome of next week's EU referendum will be very finely balanced. If you're an income investor, it could be worth asking whether any of the dividends in your portfolio are likely to be affected by a Brexit.

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Safe as houses?

Pharma giant GlaxoSmithKline (LSE: GSK) is a Neil Woodford favourite, and a fixture in many investors' income portfolios. The stock's current 5.7% forecast yield is well above the FTSE 100 average of 4%.

Glaxo shares have outperformed the market and made modest gains so far in 2016, as the outlook for the group has improved. Core earnings per share rose by 14% during the first quarter, compared to the same period last year.

Glaxo now expects full-year core earnings growth of between 10% and 12%, suggesting a full-year figure of about 85p per share. This should be enough to cover the firm's guided dividend of 80p per share.

Although some risks remain for Glaxo shareholders, in my view Brexit isn't one of them. Glaxo operates in most of the world's major economies and currencies. The firm's business is built around its portfolio of unique products, most of which have patent protection.

I can't see any logical reason why a UK vote to leave the EU would be likely to have a material effect on Glaxo's sales, or its ability to pay a reliable dividend. In my view, any short-term dips as a result of the referendum could be a good buying opportunity.

Will insurance be affected?

Shares in motor insurance group Admiral Group (LSE: ADM) have risen by 25% over the last year. The FTSE 100 has fallen by 11% over the same period, making Admiral a clear winner. But while Admiral's shares surged higher following the group's results in March, progress since then has been uncertain.

One reason for this may simply be that Admiral's shares now look quite fully priced. Earnings per share are expected to be flat this year and to rise by a relatively modest 6% in 2017. Set against this level of growth, I think Admiral's 2016 forecast P/E of 17.4 is probably high enough.

However, Brexit fears may also be playing a part. The group has insurance or price comparison businesses in France, Spain and Italy. None of these make much money for the group at the moment, but international expansion is a key part of Admiral's growth strategy.

A Brexit vote could potentially make it harder for UK companies to run regulated financial businesses in Europe. Personally, I suspect this wouldn't be a big issue, but it's definitely a risk. We simply don't know how an EU exit would be handled.

Given all of this, how safe is Admiral's dividend? The firm's total payout is expected to be 112.7p per share this year, giving a forecast yield of 6.2%.

My view is that while Admiral is banking on its European and US operations for future growth, the current dividend is funded by Admiral's UK business. I don't see any reason why a Brexit would have an immediate impact on Admiral's dividend.

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Roland Head owns shares of GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.