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UK shares have skilled a reasonably superb 2025. The FTSE 100 delivered its strongest annual efficiency since 2009, with the financials, mining, defence, and healthcare sectors main the cost.
However the fact is, even with this robust surge, many British shares are nonetheless undervalued. And meaning loads of tasty dividends are nonetheless on supply. By exploiting these untapped alternatives, buyers can unlock a considerable second revenue even with solely a comparatively modest £5,000 lump sum at hand.
Right here’s how.
Tons of of dividend investments
As of December 2025, 276 UK shares are providing a dividend yield of 4% or extra – 112 of which could be discovered throughout the FTSE 100 and FTSE 250. In different phrases, it’s not simply the large-caps providing juicy payouts proper now, however small-caps as nicely. And in some excessive cases, the dividend yields go as excessive as 22%!
At this stage of payout, a £5,000 funding would immediately unlock a £1,100 second revenue in a single day. However as all skilled buyers know, yields this excessive are nearly by no means sustainable. And this explicit firm, Petrotal, has only recently introduced the suspension of shareholder payouts – a basic yield entice.
However not all high-yield shares are destined for catastrophe. The truth is, there have been quite a few events all through historical past the place, regardless of all odds, the dividends not solely continued to circulate but in addition grew as nicely. And having the ability to spot such alternatives early on can result in spectacular funding returns.
A possible revenue outlier?
One FTSE inventory that’s began getting a number of consideration recently is Ashmore Group (LSE:ASHM). With a dividend yield of 10.4%, if I had been to take a position £5,000 proper now, the estimated passive revenue could be a chunky £520.
Contemplating a FTSE 100 index tracker would at the moment solely generate round £154 for a similar funding, it’s simple to grasp why Ashmore is beginning to flip some heads. However is that this simply one other PetroTal -type crash ready to occur?
As a fast crash course, Ashmore is an asset administration enterprise specialising in rising markets – an space that the majority of its rivals don’t are likely to concentrate on.
Regardless of rising market shares performing strongly in recent times, investor sentiment largely stays weak. And it’s finally leading to an outflow of capital from its purchasers. And with fewer funds beneath administration, Ashmore’s administration payment revenue has suffered.
This payment compression presents a large drawback. Particularly, the corporate doesn’t generate sufficient revenue to cowl its dividend obligations. That’s why the yield is so excessive.
Does that imply a dividend reduce is coming? Perhaps not.
Digging into the small print
Over the long run, Ashmore can’t maintain paying out more cash than it generates. However with a considerable £350m money buffer, administration has sufficient monetary assets to cowl its roughly £120m in annual dividends for a number of years.
That offers the corporate an honest window of alternative to rekindle investor curiosity and bolster its income stream. And to administration’s credit score, there are some early indicators of this working.
The group’s web outflows are shrinking. And with the continuing outperformance of rising market investments, the group’s property beneath administration are on the rise. Whereas there’s no assure that this restoration sample will proceed, it does trace that the UK inventory’s spectacular dividend yield may very well be right here to remain. That’s why I feel Ashmore deserves a more in-depth look.
