I’m always on the hunt for high-yielding dividend options. On average, the FTSE 250 yield’s higher than the FTSE 100. Of course, an investor needs to appreciate that stocks with a very high dividend yield do carry a higher level of risk.
Even taking this into account, here are two juicy options worth further research as I feel they could do well next year.
The winds of change
One idea is Greencoat UK Wind (LSE:UKW). The stock has a 10.52% dividend yield, and the share price is down 22% over the last year. The renewable infrastructure investment trust owns a diversified portfolio of operational wind farms across the UK, generating cash from electricity sales.
It’s appropriate to address the share price fall, given it’s acted in part to push up the dividend yield. Part of the move has been triggered simply by worsening sentiment around the future of renewable energy. It’s also due to lower electricity prices, compounded by assumptions about future generation.
Although all of these factors remain a risk going forward, there are plenty of reasons to be positive for this income share. For example, the dividend cover sits at 1.4, meaning the latest earnings per share comfortably cover the dividend.
From a sector perspective, the sentiment around renewable energy seems misplaced. The stock now trades at a 30% discount to the net asset value (NAV) of the fund. This makes it undervalued, in my book, and I think the share price could move higher in the coming years as people appreciate the long-term viability of wind power.
Outperforming peers
Another idea is Ashmore Group (LSE:ASHM). Like most asset managers, it makes money from collecting fees and commissions from the assets under management (AUM)
Back in October, the company reported a 2% rise in AUM for the latest quarter. In the half-year report, it noted that 70% of the funds beat their relative benchmarks over a rolling three-year period. Both of those factors tie into why the stock’s done well recently, rising 8% over the last year.
The dividend yield’s generous at 10%, with the company paying out a consistent 16.9p per share for several years. I think this will continue, as it has been sustainable in the past. I don’t see why it can’t stay the same based on the financial performance this year.
Looking ahead, I struggle to see demand for asset managers decreasing, as people turn to them amid increasingly difficult investing conditions.
Of course, investment returns are key to maintaining AUM. One of the main risks I see is if the funds start to underperform. Bad decisions and picks could mean Ashmore falls out of favour, with investors pulling their money.
I like both stocks for 2026 and I’m considering adding both to my portfolio. Investors with a similar mindset could think about doing the same.
