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A high-yielding dividend share that’s loved vital value progress is a uncommon factor. Much more uncommon is one that also appears to be like undervalued after such a feat.
So that you’ll perceive my shock once I got here throughout simply that — a comparatively small £509m agriculture inventory that’s crushing massive FTSE 100 names.
I needed to dig deeper…
A serious oil producer (not that oil)
Anglo-Japanese Plantations (LSE: AEP) has emerged as one of the crucial outstanding success tales on the London market this yr. With dividends, it’s achieved an astonishing 120% in 2025. Such progress would’ve turned a modest £5,000 funding on New 12 months’s Eve into roughly £11,000 right now.
That’s a £6,000 revenue in simply 10 months — a unprecedented feat for what many buyers may as soon as have dismissed as a sleepy agricultural inventory.
The corporate, headquartered in London, operates primarily throughout Indonesia and Malaysia, the place it cultivates and processes palm oil and rubber. Palm oil stays its core enterprise, utilized in every part from meals manufacturing to cosmetics and biofuels.
With international demand for vegetable oils surging and El Niño climate patterns constraining provide throughout Southeast Asia, palm oil costs have risen sharply. This has been a key driver of Anglo-Japanese’s explosive share value progress.
Will it hold going?
What makes this rally significantly spectacular is that it isn’t constructed on pure hypothesis. The corporate’s earnings have really stored tempo with the inventory’s efficiency.
In its newest half-year outcomes, it reported a 70.3% year-on-year improve in earnings, pushed largely by surging costs but in addition disciplined price administration (income in the identical interval solely grew 35.3%).
That form of progress helps justify the low valuation, suggesting the rally displays actual operational power relatively than simply market hype. Even when the expansion slows, the 5% dividend yield may ship respectable returns within the meantime.
Critically, it’s paid uninterrupted dividends for 20 years and elevated them yearly for the previous 5. Moreover, money move covers funds an unprecedented 20-fold, so no purpose to worry a near-future lower.
A risky trade
Naturally, when an organization’s income are pushed by exterior elements, warning is warranted. Palm oil costs are notoriously risky, and a reversal in commodity tendencies may shortly squeeze margins.
Previously, the inventory has quickly doubled in value, solely to crash again decrease within the following months. So buyers contemplating the inventory might want to settle for that it may be a bumpy journey.
Nonetheless, Anglo-Japanese stands as a uncommon instance of a small-cap agricultural inventory delivering each progress and worth. However extra importantly, its hovering share value seems well-supported by stable fundamentals.
The underside line
For many UK buyers, Anglo-Japanese would in all probability be an uncommon alternative. It appears onerous to discover a place for it among the many finance giants, tech start-ups and power shares of the FTSE 100.
Nonetheless, I feel it’s nonetheless price contemplating as a result of it ticks a whole lot of containers: a robust stability sheet, minimal debt, constant money era and a historical past of secure and dependable dividends.
Plus, its conservative administration method has capitalised on beneficial market circumstances with out over-extending financially — a mix that many commodity producers wrestle to take care of.
However for these in search of one thing nearer to residence, the FTSE 100’s current document excessive suggests a whole lot of different alternatives exist on the UK market.
