That potential 40% gain represents the top end of the current analyst price target range. At the other end, there’s a naysayer expecting a 5.5% fall. And the average of the most recent updates suggests a rise of around 20%. Targets like these can vary widely — but the balance does appear optimistic.

Fantastic plastic

Victrex makes something called PEEK. It’s a highly-durable polymer, used for all sorts of industrial applications where it can replace heavier metals. It’s also has niches in medical applications, and a whole host of other areas.

Patents on the material itself have expired. But it’s very hard to make, and competitors trying it from scratch face no easy task. Does that mean there’s a bit of a defensive moat? It looks that way.

But the chart above makes it seem clear that something has seriously gone wrong.

Trouble in China

The reason for the high potential dividend yield is clear — the share price has slumped 75% in the past five years. But why?

In 2024, Victrex opened a manufacturing plant at Panjin in China. But it’s been hit by technical problems that sound very expensive to fix. And that led to a £60.6m impairment charge… and a whopping £44m loss before tax for the first half of the current year.

Forecasters expect a sizeable loss for the full year too, and a jump in net debt to £43m.

Things can only get…?

On an underlying basis, however, the company expects profit before tax of £42m to £44m. At H1 time, new CEO Dr James Routh told us…

Our Profit Improvement Plan is on track for some early benefits at the end of FY 2026, with full year savings of at least £10m in FY 2027 … Overall, our growth opportunities remain strong across a broad range of end markets and geographies.

— H1 results, 11 May 2026

Analysts expect reported profit in 2027 to put the shares on a price-to-earnings (P/E) ratio of 13.5… dropping to 11.8 in 2028.

Potential pitfall

For me, there’s a big red flag. I don’t like a dividend share that isn’t backed by earnings cover. And this was hammered home when the company said…

The Group has continued to utilise the UK revolving credit facility (RCF) to support payment of the final dividend, which we anticipate will be fully repaid by 30 September 2026. We completed funding for a £20m term loan in H1 2026 to reduce reliance on the RCF.

Borrowing specifically to pay dividends? Eek! Forecasts don’t see earnings covering the dividend before 2029. So what should investors do?

Tempting, but…

If Victrex can keep the dividend going until it returns to sufficient cover by earnings, this could turn into a nice little dividend-plus-growth earner. And bold investors might do well to consider buying now, before the corner is turned.

What about me? I’m getting too old to be that bold.

Should you invest £5,000 in Victrex Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Victrex Plc made the list?

Alan Oscroft does not hold any positions in the companies mentioned.

The post With a 9.5% yield, this FTSE 250 dividend share could climb up to 40%! appeared first on The Twelfth Magpie.

Here’s how.

A miracle?

I believe the key to producing big gains from income shares is to reinvest the dividends. That way it’s possible to enjoy the remarkable benefits of compounding.

But a small percentage point difference in the yield can have a big impact. By way of example, this is how long it would take for a portfolio to double in value depending on the overall dividend yield:

• 3% – 278 months
• 4% – 209 months
• 5% – 167 months
• 6% – 139 months
• 7% – 120 months
• 8% – 105 months

At 7%, it means £10,000 would grow to £20,097 in 10 years.

A rule of thumb

Alternatively, the Rule of 72 can be used to help with the maths. If you divide 72 by the annual rate of return, it will give the number of years (approximately) in which an investment will double.

For example, 72/8 = 9 years. That’s not too far away from the 105 months (8 years and 9 months) shown above for an 8%-yielding portfolio.

But is an 8% yield realistic? I think it is.

Lots about

Admittedly, there aren’t any members of the FTSE 100 currently (17 June) yielding 8%. But look elsewhere, and you will find plenty. For example, the FTSE 250’s home to 16 of them.

Of course, dividends can’t be guaranteed. As they are a distribution of profit, they will fluctuate in line with earnings.

Also, it’s important to be cautious when it comes to high-yielding shares. Investors could be demanding a higher return because the perceived risk of owning the stock is much greater. One company that I think this applies to is Victrex (LSE:VCT).

But could sentiment be about to change?

What’s going on?

The group manufactures PEEK-based high-performance thermoplastic polymers. Although PEEK (polyether ether ketone) isn’t exclusive to the company, Victrex does have several patents relating to specific products in which it’s used.

But an investment in a new manufacturing facility in China has been a bit of a disaster. Following a review, it’s concluded that the plant isn’t capable of delivering the anticipated volumes. Although Victrex believes the country will be its fastest-growing market over the next decade, it’s going to have to spend more to increase capacity at the facility.

This has led to a loss of investor confidence and a falling share price. The result? A rising yield.

With a current return of 9.6%, the Rule of 72 tells us that it would take 7.5 years for an investment to double in value.

My view

Under a new boss, Victrex has embarked on a profit improvement programme, which includes a 10% headcount reduction. And he’s optimistic when talking about the sales pipeline.

However, during the six months to 31 March, the group’s net debt increased by £20.6m. And compared to the same period a year earlier, its margin, gross profit, and earnings per share all fell.

To be honest, I can see why investors are nervous and why they are demanding a return of nearly 10%. On this basis, I’d rather take a look at the other 8%+ yielders on the FTSE 250.

Should you invest £5,000 in Victrex Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Victrex Plc made the list?

James Beard does not own shares in any of the companies mentioned.

The post Could a portfolio of dividend shares turn £10,000 into £20,097 in 10 years? appeared first on The Twelfth Magpie.

Of course, sky-high yields often signal massive risks and dividend cuts ahead. Yet occasionally, a genuinely quality business gets mispriced. And patient investors who spot it early can lock in a life-changing passive income stream.

So could Victrex (LSE:VCT) be one of those exceptions? At a 9.8% yield, the PEEK polymer specialist already stands out.

But one analyst has gone further, slapping an 870p price target on the shares. Compared to where the stock is trading today, that implies a potential 44.3% gain over the next 12 months.

So is this a screaming buy? Or is it a trap?

What does Victrex actually do?

Victrex is the world-leading manufacturer of PEEK – the high-performance polymer used in aerospace, medical devices, automotive, electronics, and energy applications. Its products are notoriously difficult to replicate, giving Victrex significant pricing power in the sectors it serves. And with over 40 years of application expertise, its moat’s real.

But if that’s the case, then why have the shares performed so poorly in recent years?

What happened?

The short answer is a painful combination of operational setbacks and structural disappointments. And the most damaging has been China.

Victrex invested heavily in a new manufacturing facility in Panjin. And what was supposed to be a major growth catalyst has so far been an underperforming headache. So much so that management has just recognised a staggering £60.6m impairment charge on the facility.

The direct hit to assets is obviously frustrating. But the more significant damage is to investor confidence. In a technically demanding industry, capital allocation skill is crucial for long-term success. And this recent escapade hasn’t exactly painted leadership in the best of light.

At the same time, underlying pre-tax profits fell 18% to £19m in H1 2026, gross margins slipped 240 basis points, and the reported loss before tax was £44m.

Can management turn it around?

To be fair, there are genuine green shoots of recovery emerging. Volume across the first half of 2026 is up by 6%, with momentum in the second quarter notably accelerating as management’s Profit Improvement plan starts to deliver some tangible savings.

That’s good news for earnings. And, crucially, the interim dividend was maintained at 13.42p per share – a strong signal of confidence that better times lie ahead.

So is this a risk worth taking?

What’s the verdict?

It’s always nice to see dividends being maintained. But when looking a little closer, it’s possible management’s digging itself deeper into a hole. Why? Because it’s taking on more debt to maintain payments to shareholders.

If volumes continue to recover and operational savings help restore profit margins, there’s likely not going to be a major issue. But if the firm fails in execution again, then not only could dividends end up on the chopping block, but the balance sheet could also become significantly more leveraged.

With that in mind, it’s no wonder why the shares are seemingly so cheap and the dividend yield so high.

Personally, the risk’s too high for my tastes. But there’s a viable road to recovery here. That’s why I’m still keeping a close eye on how Victrex performs throughout the rest of 2026.

Should you invest £5,000 in Victrex Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Victrex Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post This dividend stock yields 9.8% and is potentially 44.3% undervalued! appeared first on The Twelfth Magpie.

In fact, here are five UK stocks currently offering a dividend yield of 7% or more – each operating in a completely different sector:

That’s a ready-made diversified income basket spanning five distinct industries. But before getting too excited, it’s worth remembering that a sky-high yield can sometimes be a warning sign of trouble ahead.

So simply using yield by itself as a stock-picking strategy is likely to end in disaster. Instead, it’s just a starting point and investors need to dig deeper.

With that in mind, let’s take a closer look at the highest yielder on the list.

Why’s Victrex yielding 9.2%?

As a quick introduction, Victrex is a world-leading manufacturer of PEEK – a high-performance polymer used in aerospace, medical devices, electronics, and automotive applications.

So why’s the yield so high? Simply put, the share price has collapsed.

Over the last five years, Victrex shares have fallen close to 75%, turning what was once a modest yield into an eye-catching 9.2%. The culprit is a combination of margin pressure, a difficult sales mix, and persistent operational challenges at its new manufacturing facility in China.

The most recent results only added to the gloom. Underlying pre-tax profits fell 18% to £19m, and the company was forced to record a £60.6m non-cash impairment charge against its China facility.

But could things finally be starting to look up?

Is a recovery on the horizon?

Despite all the recent challenges, Victrex still has one major advantage – an exceptional product moat. PEEK’s used in mission-critical applications where switching to a cheaper alternative simply isn’t an option, giving the business pricing power in regulated sectors like aerospace and healthcare.

At the same time, despite the recent weaker earnings, total volumes for PEEK are back on the rise, signalling that part of the group’s troubles have been driven by cyclical challenges rather than structural ones. Throw in an ongoing cost savings scheme, and Victrex’s profit outlook appears to be improving.

That said, there’s still a long road ahead. And in the meantime, dividend coverage is looking pretty uncomfortable at 0.74 times. That isn’t a sustainable position. And with a full strategic review and Capital Markets Day planned for September, there’s a good chance a dividend cut could be on the horizon.

Worth the risk?

Personally, I think Victrex carries too much near-term uncertainty to be a compelling income buy to think about right now. The underlying business has genuine quality, but until the China situation stabilises and the dividend cover recovers, the yield feels quite precarious.

But that’s just one name on the list. The other four dividend shares above each come with their own distinct investment case. And with a bit of digging, it’s possible investors will uncover a potentially lucrative passive income opportunity.

Should you invest £5,000 in Victrex Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Victrex Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post 5 UK dividend shares with 7%+ yields appeared first on The Twelfth Magpie.

Here are two that institutional analysts believe are significantly undervalued right now, and could deliver outstanding returns over the next 10 years.

1. Victrex: a battered materials specialist

Victrex (LSE:VCT) is one of the world’s leading manufacturers of high-performance PEEK polymers. These are specialised ultra-durable, lightweight materials used in the aerospace, automotive, medical device, and semiconductor industries.

The stock’s fallen nearly 40% from its 52-week high, yet the underlying business continues to generate significant cash. As such, dividends have continued to flow, pushing the yield to a remarkable 10.1% – one of the highest in the FTSE 250.

Analysts at Berenberg and Citi are both issuing price targets of 695p and 700p respectively, suggesting that a chunky 25% discount may exist.

As Victrex’s H1 2026 results noted, revenue’s growing despite near-term margin pressure caused, in part, by inventory destocking headwinds. That’s a signal the core business and underlying demand remain intact and the company’s merely suffering from a temporary cyclical downturn.

This perfectly demonstrates the cyclical nature of Victrex’s business. And while the market will eventually recover, there’s a big question mark over the timeline of this recovery.

A prolonged slowdown in automotive and aerospace production weighs heavily on demand for PEEK polymers. And it’s why analyst opinions are split, with five recommending to Buy, six recommending to Hold, and two putting Victrex in the Sell category – a reflection of the genuine uncertainty about the pace of recovery.

2. Barratt Redrow: a deep-value housing play

Barratt Redrow (LSE:BTRW) was formed from the merger of two of the UK’s largest housebuilders, creating a business with enormous scale and a powerful position in the structurally undersupplied UK housing market.

Of the 19 analysts following the business, 15 rate the stock a Buy, with an average 12-month price target of 414p against a current share price of around 257p. That’s a 61% potential capital gain for value investors today.

And with the UK government still committed to building 1.5 million homes, the structural tailwind for housebuilders looks powerful over the next decade.

The bear case however, is real. The post-merger integration of Barratt and Redrow is still ongoing, and execution risk remains elevated. Higher mortgage rates continue to weigh on buyer affordability, and the company faces a significant fire safety remediation bill that could pressure free cash flow for years to come.

For patient investors with a 10-year horizon, these risks may prove temporary. But they shouldn’t be taken lightly.

The bottom line

Both of these value stocks are trading at meaningful discounts to analyst price targets. Of course, neither stock is a guaranteed winner. The cyclical and operational risks are very real and could leave investors bitterly disappointed.

But providing both companies continue successfully navigate their near-term challenges, I think both Victrex and Barratt Redrow are worth a deeper dive today.

After all, the best opportunities rarely come gift-wrapped, and that’s exactly what could make these two so interesting right now.

The post Expert picks: 2 top value stocks to buy and hold until 2036? appeared first on The Twelfth Magpie.

So is this a screaming buying opportunity? Or a classic value trap for investors to avoid?

What does Victrex actually do?

Victrex’s a world-leading manufacturer of PEEK polymers – a high-performance thermoplastic used across demanding sectors including aerospace, automotive, medical devices, electronics, and industrial engineering.

And as one of the world’s leading pioneers of this niche and versatile material, Victrex has historically commanded strong pricing power that, up to 2021, delivered outstanding shareholder returns.

So what went wrong?

Why’s Victrex in the doghouse?

There are essentially two primary catalysts behind Victrex’s recent downfall:

• Pandemic-driven supply chain disruptions led to overstocking by customers, resulting in a global inventory glut.
• Higher interest rates have weighed heavily across virtually all of Victrex’s target markets.

The impact of this is clear looking at the group’s latest results. Underlying pre-tax profits tumbled 21% in 2025 on the back of a less profitable product mix and nasty currency exchange headwinds. Meanwhile, it’s recently completed a manufacturing facility in China, which was supposed to be a new growth engine, but has so far proven to be a bit of a headache.

In 2026, this weaker performance has seemingly continued with both volumes and revenues falling by mid-single digits during the first quarter. And it seems its ambitious longer-term ‘mega-programmes’ are also being quietly scaled back to reduce near-term costs.

So far, a sustained operational and financial recovery has proven elusive. And 2026 looks likely to be another transitional year. But looking towards 2027, some promising signs seem to be emerging.

Is there a bull case?

Despite the gloom, there are genuine reasons for optimism. Even with a massive 9.5% yield, management’s maintained the annual dividend at 59.56p per share – signalling strong conviction in the long-term outlook.

Meanwhile, new CEO James Routh is driving a broader operational review targeting “commercial, cost and operating efficiencies”, which could meaningfully start to lift earnings from depressed levels. And this positive impact could be even further amplified by an eventual wider cyclical recovery for PEEK demand across its end markets.

That said, maintaining dividends at almost 60p is a risky move considering underlying earnings per share only reached 43.9p, putting the payout ratio at an alarmingly high 135.7%.

In the short term, that’s not necessarily disastrous. But if management’s expected market recovery doesn’t materialise in time, shareholders could not only suffer a dividend cut, but see the balance sheet significantly weakened as well.

So what’s the verdict?

Victrex’s long-term opportunity remains genuinely enormous. The company estimates its total addressable market could be five times larger than its current revenue stream, with PEEK demand forecast to grow strongly over the coming decade.

Personally, I want to see a bit more recovery progress before considering this value stock for my portfolio. But seeing such a growth opportunity on sale for just 14.4 times underlying earnings is pretty rare. So for contrarian investors willing to be patient, a closer inspection might not be a bad idea.

The post Here’s 1 dirt cheap value stock paying BIG dividends appeared first on The Twelfth Magpie.

On paper, that means investors could be looking at a juicy passive income opportunity. But a high yield is only as good as the underlying earnings supporting it. And if cash profits start falling behind, this seemingly lucrative income opportunity could become an income trap.

So, let’s figure out which camp Victrex shares belong to.

Why is the Victrex yield so high?

Victrex is a global leading manufacturer of PEEK polymers – a high-performance lightweight thermoplastic used throughout the automotive, aerospace, medical, and industrial engineering sectors.

However, a global inventory glut combined with higher interest rates has weighed heavily on PEEK polymer demand across most of its target markets in recent years. As such, Victrex shares haven’t exactly been stellar performers of late. In fact, the stock is down close to 70% since April 2021. And even in 2026, the shares have continued to slip.

Despite this cyclical downturn, management has nonetheless maintained shareholder payouts, resulting in the yield climbing from around 2.5% to over 10% today.

The question investors now have to answer is whether or not the cycle is approaching its long-anticipated recovery.

Green shoots are emerging

In its 2025 fiscal year (ending in September), some encouraging trends started to emerge.

After years of customers relying on excess pandemic-era inventory, the destocking headwinds finally started showing signs of slowdown down. And while a less favourable product mix still resulted in underlying profits suffering, that too might soon start to change.

Following its latest trading update in February 2026, management’s profit improvement plan is now underway with a minimum savings target of £10m per year by September 2027. As such, the company has described 2026 as a “transitional year”, with a step up in volumes, growth, and profitability expected in 2027 and beyond.

Risk versus reward

Obviously, seeing early signs of recovery is promising, as is the expected long-term trajectory of the global PEEK polymer market. However, there still remains a lot of uncertainty surrounding this business, especially for its dividend.

Why? Because as things stand, the company is paying out more in dividends than it’s generating in profit… a lot more.

For reference, Victrex’s dividend per share in 2025 stood at 59.56p versus an earnings per share of just 32p. And subsequently, management has been taking on debt to continue rewarding shareholders.

Needless to say, it’s a risky move. And if the expected market rebound fails to materialise or another macroeconomic headwind emerges, delaying the recovery, the company could end up in a deep financial hole.

The honest verdict

Victrex’s lofty dividend yield is a reflection of the non-trivial risk surrounding this business. There is a valid bull case to be made if market conditions improve as expected. But any further delays or disruptions could quickly wipe out such hopes, leaving investors vulnerable to a dividend cut.

Personally, the risk’s too high for my tastes. That’s why I’m looking at other high-yield income opportunities right now.

The post 10.4% dividend yield! Should I buy this high-income FTSE stock today? appeared first on The Twelfth Magpie.

A combination of external and internal pressures has dragged down the share price over the last 12 months. And yet it remains confident in rewarding loyal shareholders with juicy dividends. So much so that the FTSE 250 stock now pays a staggeringly-high 9.9% yield!

So could this be a rare opportunity to lock in an awesome passive income at a massively discounted price? Let’s find out.

The Victrex puzzle

As a quick introduction, Victrex is the world’s largest manufacturer of PEEK– a high-performance engineering polymer with pretty exceptional material properties.

PEEK’s chemically inert, biocompatible with the human body, electrically and thermally resistant, and offers impressive strength, all while being incredibly lightweight. As such, manufacturers within the automotive, aerospace, healthcare, and electronics sectors are increasingly substituting traditional metals such as aluminium with this polymer. And the steady increase in demand is reflected in the group’s rising PEEK volumes.

Yet, despite this higher demand, revenue and earnings are still struggling, sending the share price down almost 40% in the last 12 months. What’s going on?

Good strategy meets bad execution

While PEEK volumes have been rising, a combination of shifting product mix and stiff Chinese competition has resulted in average selling prices suffering.

As such, revenue growth over the last five years has pretty much flatlined. And the profit picture is even less impressive, as heavy investment into a new manufacturing plant in China weighed down on the bottom line.

The plant was supposed to improve Victrex’s competitive position in a key market. But this once-highly anticipated growth catalyst has so far proven to be a bit of a headache, with initial volumes struggling to ramp up and no clear breakeven timeline available.

Yet despite these stumbles, dividends are still being paid. How?

What’s behind the 9.9% yield?

While disappointing, operations at Victrex’s China plant are slowly getting back on track. And management is also expecting to deliver £10m in annualised savings by September 2027.

At the same time, new contracts are emerging from the group’s ‘mega programme pipeline’. This includes the firm’s Magma project, where PEEK piping is used for deepwater oil & gas production, with revenues expected to start materialising in 2026.

As such, management appears fairly confident about Victrex’s financial outlook, describing 2026 as a transitional year before a solid earnings recovery story kicks off in 2027.

In the meantime, dividends are being maintained with debt. That’s fine if the promised turnaround is successfully delivered. But if this expected recovery fails to materialise, Victrex could be stretching its balance sheet too thin, ultimately leading to a painful payout cut.

So, what’s the verdict?

The possibility of an earnings inflexion in 2027 is very real. But it relies on solid execution – something that Victrex hasn’t exactly demonstrated in recent years.

So, while a £5,000 investment does snap up 827 discounted shares and unlocks a near-£500 passive income, it comes with a high level of risk. And personally, I think there are other income stocks that look far more secure right now.

The post £5,000 buys 827 shares in this 9.9%-yielding income stock! appeared first on The Twelfth Magpie.

To try and narrow down the search, I asked ChatGPT to identify the country’s cheapest share. This is what the software told me. 

Caution!

Before giving the answer, the programme warned that it was unable to identify the most undervalued stock “with absolute certainty”. It pointed out that there were a number of different valuation techniques available.

ChatGPT then listed a few shares that appear to be trading below their “estimated intrinsic value”. Warren Buffett describes this as the “discounted value of the cash that can be taken out of a business during its remaining life”. He says it’s the “only logical approach” to evaluating investments.

The alternative Magnificent Seven?

The seven identified by the software were On the Beach Group, Victrex (LSE:VCT), Brickability Group, PageGroup, Motorpoint Group, Pinewood Technologies Group, and Nichols.

I then asked it to pick its favourite. It said it would “lean towards” Victrex. Why?

Well, it suggested the producer of polymers had a “structural niche advantage” and that its recent share price fall could be a buying opportunity. It also highlighted its “strong” balance sheet and good dividend history.

Of course, relying on a piece of software to make investment decisions isn’t a good idea. Artificial intelligence tools have earned a reputation for making some glaring errors. In my view, it’s essential to undertake some human-led research before parting with any cash.

So that’s what I did. I decided to take a closer look at Victrex.

What did I learn?

The group manufactures high-performance polymers (very strong plastics), which are used in a wide variety of applications. Due to the specialist nature of its activities, it has relatively few competitors.

But its share price has come under pressure over the past five years. It’s fallen 70% since March 2021.

The principal reason is that market conditions have resulted in the group selling more of its lower margin products. For example, in volume terms, the company sold 12% more during the year ended 30 September 2025 (FY25) but its revenue was only 1% higher compared to FY24.

Its FY21 gross profit margin was 54%. During FY25, it fell to 45.3%.

Other problems include tariffs and teething problems associated with starting production at its new factory in China.

Over the past five years, the group’s dividend has been remarkably consistent. In fact, it’s remained unchanged at 59.56p a share. It means the stock’s now yielding an amazing 9.3%. However, a flat payout and huge yield could be a warning sign of an impending cut.

Encouragingly, the group has little debt.

So is the stock cheap?

Applying some of the valuation techniques that ChatGPT identified, including the price-to-earnings (P/E) ratio, does suggest the stock’s reasonably priced, certainly by recent standards.

However, I’m unconvinced Victrex is undervalued. Its financial performance is going in the wrong direction, which explains why its share price is declining. Also, the group said 2026 will be a “transitional year”, which is really a polite way of warning shareholders not to get too excited. Therefore, I don’t want to invest.

The post I asked ChatGPT to name the most undervalued share on the UK stock market. Here’s what it said… appeared first on The Twelfth Magpie.

But on rare occasions, I find a company with a high yield that’s well-covered and sustainable. Such instances can be an excellent opportunity to boost a portfolio’s average yield.

Currently, Victrex (LSE: VCT) looks like just such a stock. But do the benefits outweigh the risks?

A high and reliable dividend yield

Victrex is a world-leading manufacturer of PEEK, a super-strong plastic used in planes, cars, medical gear and electronics. From mobile phones to medical implants, it’s found everywhere — so demand isn’t an issue. But trade tariffs and a tough market tore the shares down 26% in the past 12 months.

But since bottoming-out at 589p last November (2025), they’ve recovered 14.6%.

The wider fall in price has ramped up the yield, pushing it past 8%. And now that a recovery looks genuinely likely, it’s appealing to both income and growth hunters. But can it maintain that high yield?

Recent earnings results

Last year’s numbers weren’t great due to currency swings, a weak medical market and startup costs at its new China factory. Even while sales volumes rose 12%, revenue dipped and underlying profit before tax fell 21%. Earnings per share (EPS) dropped 15% to 43.9p.

Yet through it all, the board kept the dividend flat at 59.56p per share for the year, with the next payment due at the end of February.

And that’s the real draw: a high-yielding dividend stock with proven reliability. Payouts have grown around 2.8% a year even while margins have shrunk. Plus, cash coverage remains sufficient 1.23 times even with the dip in profits.

What’s more, debt’s minimal at only £49m, with plenty of cash to cover interest payments and a balance sheet that looks solid.

Currently trading on a forward price-to-earnings (P/E) ratio around 14, it’s far cheaper than historical averages. PEEK demand’s expected to grow as planes and cars become lighter and medical uses expand.

But right now, medical is soft with destocking while Asia competition’s heating up. Plus, China factory costs dragged profits down by £8m last year and are likely to do so again this year.

What does this mean for investors?

Right now, the core concern is a lack of earnings visibility. While medical implementations are expected to recover, that isn’t guaranteed. If profits don’t improve, the new China factory costs could ramp up debt. 

At the same time, the economic slowdown is hitting big customers like those in aerospace. If volumes stall or competition bites, dividends could come under pressure despite the coverage.

For a UK investor happy with moderate risk, Victrex is still worth considering — given its high yield, healthy finances, and decent growth potential (if sectors rebound).

It’s not a sure thing but, in my opinion, it could be a rare opportunity to boost the average yield in a diversified portfolio.

The post An 8.5% dividend yield? I’m thinking of buying shares in this recovering FTSE 250 income gem appeared first on The Twelfth Magpie.