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The most common measure used to assess dividend shares is their yield. At the moment (23 July), the two highest yielding stocks on the FTSE 100 are WPP (LSE:WPP) and Taylor Wimpey (LSE:TW.).
But I think each has a different story to tell.
Difficult times
It’s been a torrid few months for creative media agency WPP. It recently issued a profit warning advising that its 2025 like-for-like revenue (less pass through costs) is likely to be 3-5% lower than in 2024.
It’s now the highest yielder on the FTSE 100. But it’s not because of an increase in its payout. In fact, its dividend has remained unchanged for the past three financial years. Instead, it’s because of a falling share price. On the day of its profit warning, its stock plummeted nearly 19%.
I suspect most investors are now anticipating a cut in its dividend.
| Date | Dividend – previous 12 months | Share price (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 uncertain future
Whether this happens or not depends on how it copes with the current industry downturn. I’m sure global economic uncertainty is a major reason for the reduction in advertising and marketing budgets. Discretionary spending is one of the first things to come under the spotlight when times are tough.
However, it’s still unclear how artificial intelligence (AI) is affecting this trend. In 2024, WPP spent £250m on “AI expertise, data capability and cutting-edge technology”.
But this technology’s making it easier for companies to create their own campaigns. The impact on WPP — and the industry in which it operates — isn’t yet fully understood.
However, the creative giant remains profitable with a global reach. It has operations in over 100 countries and retains an impressive client base. And I’m sure its newly-appointed CEO, Cindy Rose, knows a thing or two about AI. She’s currently working for Microsoft.
Personally, with so much uncertainty surrounding the sector, I don’t want to take a stake in WPP.
Same but different
Similarly, Taylor Wimpey’s yield has been boosted by a falling share price. But, unlike WPP, it’s expecting an increase in profit this year.
It hopes to sell 10,400-10,800 homes (excluding joint ventures) compared to the 9,972 it completed in 2024.
Other signs that the housing market could be on the turn include a rise in UK mortgage lending. During Q1 2025, gross mortgage advances were at their highest level since Q4 2022. However, this must be treated with caution as stamp duty changes came into effect at the start of April.
| Date | Dividend – previous 12 months | Share price (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 |
Fundamental changes
The Bank of England has announced that 15% of new loans (currently 10%) can be assessed on 4.5 times income. Along with changes to planning law, this should help the industry in the medium term.
More immediately, anticipated cuts in the base rate are likely to stimulate mortgage (and housing) demand. Most economists are predicting a cut in August with more to follow over the next year or so.
Of course, the housing market might not recover. The UK economy appears fragile and inflation hasn’t yet been tamed. Also, Taylor Wimpey’s margin is much lower than before the pandemic. It must therefore sell more just to stand still.
However, I think Taylor Wimpey’s a stock that investors could consider. I believe there’s enough evidence to suggest that the housing market’s starting to pick up, which should help it maintain its impressive above-average dividend.
