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The most typical measure used to evaluate dividend shares is their yield. In the intervening time (23 July), the 2 highest yielding shares on the FTSE 100 are WPP (LSE:WPP) and Taylor Wimpey (LSE:TW.).
However I feel every has a special story to inform.
Troublesome occasions
It’s been a torrid few months for inventive media company WPP. It just lately issued a revenue warning advising that its 2025 like-for-like income (much less move by prices) is more likely to be 3-5% decrease than in 2024.
It’s now the best yielder on the FTSE 100. Nevertheless it’s not due to a rise in its payout. In truth, its dividend has remained unchanged for the previous three monetary years. As an alternative, it’s due to a falling share value. On the day of its revenue warning, its inventory plummeted practically 19%.
I think most traders at the moment are anticipating a lower in its dividend.
| Date | Dividend – earlier 12 months | Share value (pence) | Yield (%) |
|---|---|---|---|
| 31.12.20 | 24.0 | 800 | 3.0 |
| 31.12.21 | 31.2 | 1,120 | 2.8 |
| 31.12.22 | 39.4 | 820 | 4.8 |
| 31.12.23 | 39.4 | 753 | 5.2 |
| 31.12.24 | 39.4 | 827 | 4.8 |
| 23.7.25 | 39.4 | 431 | 9.1 |
An unsure future
Whether or not this occurs or not is determined by the way it copes with the present business downturn. I’m positive world financial uncertainty is a significant purpose for the discount in promoting and advertising and marketing budgets. Discretionary spending is among the first issues to return beneath the highlight when occasions are robust.
Nonetheless, it’s nonetheless unclear how synthetic intelligence (AI) is affecting this pattern. In 2024, WPP spent £250m on “AI experience, knowledge functionality and cutting-edge expertise”.
However this expertise’s making it simpler for firms to create their very own campaigns. The impression on WPP — and the business by which it operates — isn’t but totally understood.
Nonetheless, the inventive large stays worthwhile with a worldwide attain. It has operations in over 100 nations and retains a formidable consumer base. And I’m positive its newly-appointed CEO, Cindy Rose, is aware of a factor or two about AI. She’s at present working for Microsoft.
Personally, with a lot uncertainty surrounding the sector, I don’t wish to take a stake in WPP.
Similar however completely different
Equally, Taylor Wimpey’s yield has been boosted by a falling share value. However, in contrast to WPP, it’s anticipating a rise in revenue this 12 months.
It hopes to promote 10,400-10,800 houses (excluding joint ventures) in comparison with the 9,972 it accomplished in 2024.
Different indicators that the housing market might be on the flip embrace an increase in UK mortgage lending. Throughout Q1 2025, gross mortgage advances had been at their highest stage since This autumn 2022. Nonetheless, this should be handled with warning as stamp responsibility adjustments got here into impact in the beginning of April.
| Date | Dividend – earlier 12 months | Share value (pence) | Yield (%) |
|---|---|---|---|
| 31.12.20 | 4.14 | 166 | 2.5 |
| 31.12.21 | 8.58 | 176 | 4.9 |
| 31.12.22 | 9.40 | 102 | 9.2 |
| 31.12.23 | 9.58 | 147 | 6.5 |
| 31.12.24 | 9.46 | 122 | 7.8 |
| 23.7.25 | 9.46 | 113 | 8.4 |
Basic adjustments
The Financial institution of England has introduced that 15% of latest loans (at present 10%) could be assessed on 4.5 occasions revenue. Together with adjustments to planning legislation, this could assist the business within the medium time period.
Extra instantly, anticipated cuts within the base fee are more likely to stimulate mortgage (and housing) demand. Most economists are predicting a lower in August with extra to observe over the following 12 months or so.
After all, the housing market may not recuperate. The UK financial system seems fragile and inflation hasn’t but been tamed. Additionally, Taylor Wimpey’s margin is far decrease than earlier than the pandemic. It should due to this fact promote extra simply to face nonetheless.
Nonetheless, I feel Taylor Wimpey’s a inventory that traders may think about. I consider there’s sufficient proof to recommend that the housing market’s beginning to decide up, which ought to assist it preserve its spectacular above-average dividend.
