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Buyers trying to find a high-yield FTSE 100 dividend share so as to add to their portfolio will discover a stunning candidate. Among the many normal massive payers, WPP‘s (LSE: WPP) making an look.
WPP all the time felt extra like a development inventory than an earnings play to me. Sadly, its current transformation is the results of weak spot, not power.
The promoting and media group has been battling structural change ever since driving pressure Sir Martin Sorrell give up underneath a cloud in 2018. Markets are cautious, purchasers are spending much less, and digital rivals have lower into its once-dominant place.
Shock earnings star
First-quarter outcomes revealed on 25 April confirmed reported revenues falling 5% to £3.24bn, or 0.7% on a like-for-like foundation. Income (much less pass-through prices) dropped 2.7% to £2.48bn, with the UK and western Europe each down greater than 4%.
North America, the group’s largest market, was extra secure and administration reiterated full-year forecasts, however development seems in brief provide.
The WPP share value is down 28% in a 12 months and trades at a 10-year low. That largely explains the excessive trailing dividend yield, which now stands at 7.1%.
That yield’s effectively above the FTSE 100 common. The trailing price-to-earnings ratio is simply over seven too, so WPP seems good worth.
Solely 4 different FTSE 100 shares yield extra: M&G, Phoenix Group Holdings, Authorized & Common Group and Taylor Wimpey. All 4 already sit in my portfolio. So ought to I full the set?
Analysts aren’t satisfied
It’s tempting. WPP nonetheless has severe scale, using round 115,000 folks throughout greater than 100 nations. There are indicators of innovation, with £300m going into the WPP Open platform to spice up its information and synthetic intelligence (AI) capabilities. Margins have improved as value financial savings begin to filter via. Working revenue jumped 150% final 12 months, though this was flattered by disposals. Internet debt’s falling and money movement’s stronger.
Regardless of these indicators of progress, the temper amongst analysts is cautious. Of 13 providing inventory rankings, simply two charge it a Purchase. Eight counsel Maintain and three say Promote. Which is hardly a ringing endorsement.
The median one-year consensus goal is 655p, up greater than 19% from in the present day’s 549p. That means a complete return of round 26% when the dividend’s included. Now it’s price remembering, that is solely a forecast. Not a assure.
A lot hinges on the worldwide economic system. With many purchasers hit by delicate demand and mounting political uncertainty, WPP has warned the subsequent few months will stay robust. US tariffs are squeezing shopper budgets too.
Dividend drama
Earnings seekers ought to word that the full dividend has been held at 39.4p per share for 2 years. That’s comprehensible given in the present day’s excessive yield, however nonetheless a priority. Earlier than Covid, WPP had a robust dividend file. It froze payouts in the course of the monetary disaster, and slashed them by 62% within the pandemic. In any other case, they’ve climbed this millennium.
WPP’s a tempting restoration play however current expertise has taught me that issues can worsen earlier than they get higher. The shares are down 6% within the final week and traders must be prepared to simply accept that sort of fast loss, or doubtlessly extra. I believe it’s a bit too early for me to think about shopping for it.
