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In 2025, there continues to be plenty of UK stocks offering impressive dividend yields. And with some valuations taking a tumble, the passive income opportunities are starting to stretch into double-digit payout territory.
Perhaps a perfect example of this is RWS Holdings (LSE:RWS). The language and localisation enterprise has encountered a few bumps of late, slashing its market-cap in half over the last 12 months. But despite these challenges, management has continued to maintain dividends, offering an impressive 14.1% yield.
The question investors now have to ask is, can the business bounce back and continue generating long-term passive income?
What’s going on?
The trouble at RWS really kicked off in May when the company issued a concerning profit warning. Due to a variety of factors, including currency headwinds, technology investments, and unexpected non-cash charges, underlying earnings guidance was massively cut. And following the group’s interim results in June, management wasn’t kidding.
The group’s underlying pre-tax profits across the first half of 2025 collapsed by 61%, from £45.6m to £18m. And while performance is expected to improve in the second half, full-year guidance places earnings between £60m and £70m – a significant reduction compared to the £107m achieved in 2024.
Investor sentiment surrounding this business has slowly been souring for a while. Given the group specialises in translating corporate documents like patents and trademarks, there’s a valid concern of obsolescence now that artificial intelligence (AI) is taking off. And with investors already fretting over fears of disruption, this profit warning resulted in a massive 45% single-day crash earlier this year.
What now?
Since the sharp drop in share price a few months ago, RWS shares have rebounded slightly. And under the new leadership of an ex-Google executive, the company has unveiled a fresh strategy to get organic growth and margins back on track.
Rather than letting AI disrupt its business, RWS is attempting to embrace it. It’s putting its own AI translation tools at the heart of its operations via a simplified software-as-a-service subscription revenue model. In the words of management, the move is “about strategically repositioning RWS to stay relevant to clients’ future needs”.
It’s still early days, but modest organic growth has already started to materialise. And with existing AI tools already on offer, the company has a solid foundation to start migrating existing customers.
If this strategy is successful, then not only could the RWS share price rebound, but the subsequently predictable cash flows from subscriptions could further support shareholder payouts. In other words, today’s impressive dividend yield could be here to stay.
Admittedly, that’s a big ‘if’. Investors currently have RWS on a short leash, and further disruption or a lack of operational progress could mean the stock might have further to fall. Therefore, despite the tempting yield, it might be prudent to consider staying on the sidelines to see how the company handles its strategic transition, at least for now.
