UPDATE: Just announced—investors are now eyeing high-yield opportunities as the FTSE 100’s dividend yield has plummeted to 3.1%. This sharp drop from the typical 4% comes amid soaring stock prices, leaving many investors searching for alternatives to secure a 7% dividend yield in 2026.
In a market where 91 UK shares currently offer dividends of 7% or more, the challenge remains to identify which companies can sustain these payouts long-term. A critical reminder comes from the recent struggles of WPP (LSE:WPP), where shareholders experienced a dividend cut and a plummeting share price.
The root cause? A perfect storm of weak economic conditions and rising demand for cost-cutting measures, including the shift to free AI tools for marketing. As a result, WPP’s dividend yield dramatically increased from around 4% to as high as nearly 12%, creating what some call a “yield trap.”
How can investors secure a 7% yield using an ISA in 2026? The focus should be on cash flow. Investors must evaluate whether companies can generate enough cash to cover their dividend payments. WPP’s recent woes highlight this necessity; prior to its half-year results, potential investors should have recognized that the answer to cash flow sustainability was a resounding “no.”
Yet, there may still be hope for WPP. The company’s forward dividend yield for the full 2025 year stands at 7.1%, slightly above the 7% target for ISAs. With Cindy Rose stepping in as the new CEO in September and focusing on a turnaround strategy set to launch in early 2026, there could be an opportunity for contrarian investors.
Rose aims to streamline WPP’s complex operations, which have hindered cash flow compared to competitors like Publicis and Omnicom. If successful, this could lead to a significant rebound in cash generation. Additionally, if interest rate cuts stimulate economic growth, demand for advertising could further support WPP’s recovery.
What’s next? Investors should closely monitor WPP’s ability to improve cash flow under Rose’s leadership. If the company shows signs of rebounding, it could emerge as a valuable high-yield stock for ISA income portfolios.
For those considering investments, expert Mark Rogers from the Motley Fool suggests that now might be the time to evaluate standout stocks, including WPP, as potential candidates for a lucrative investment. With the right moves, WPP could transform from a cautionary tale into a promising opportunity.
Stay tuned for real-time updates as the market evolves. Investors are encouraged to act quickly and strategically to capitalize on these developing trends in the FTSE 100.
