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A decade ago, I was quite bullish on UK dividend stock WPP (LSE: WPP). The company was performing well, the share price was in a strong uptrend, and dividends were consistently rising, so I had some shares in my portfolio.
However, in late 2020, I noticed that the long-term outlook for the advertising company had dramatically changed due to technological disruption. So, I offloaded my shares.
Thank goodness I did. Since I sold, they’ve fallen around 65% meaning that £5,000 worth of shares on the day I offloaded them is now worth about £1,750 (note that dividends received would have offset some of these losses).
A victim of tech disruption
One thing we all need to think about today as long-term investors is the potential for technological disruption. That’s because new technologies are having a huge negative impact on a lot of well established businesses.
WPP is a great example of this. While it used to be dominant in the advertising space, it has come under a lot of pressure from the likes of Google and Facebook over the last decade, which have captured a huge amount of market share with their innovative digital advertising services.
Making matters worse, WPP is now facing pressure from artificial intelligence (AI). Using AI, businesses can do a lot of the stuff that WPP has been able to charge (a fortune) for in the past themselves in-house (like customised advertising strategies, content creation, data analytics, etc).
A company in decline
All of this disruption is illustrated in WPP’s financials. They don’t look good right now.
Earlier this week, the company reported a worse-than-expected 5.9% drop in like-for-like net revenue for the third quarter of 2025. Meanwhile, it said that the full-year fall could be as much as 6% (analysts had been expecting a drop of 4.5%).
These numbers tell us that this company is clearly facing some big challenges at present. Right now, this is a business in decline.
Chance of a rebound?
Is there potential for a bounce-back in the share price at some stage? Maybe.
It has fallen a long way recently. Currently, it’s sitting at levels last seen more than 20 years ago.
As for the stock’s price-to-earnings (P/E) ratio, it’s very low around 4.2. But this could be deceptive as earnings forecasts could be set to fall.
One thing that may potentially attract investors is the dividend yield. It currently stands at 8.8%.
But I wouldn’t rely on this forecast yield. Given its challenges, WPP has slashed its payout several times over the last few years (there was a 50% cut announced in August this year) and I think further cuts are a real possibility as the company tries to improve its performance.
It’s worth noting that WPP was one of the most bought stocks on AJ Bell this week. So clearly, a lot of investors see the potential for a rebound (or big dividends).
Personally, I think it’s a risky stock. To my mind, there are better opportunities in the market today.
But it seems some of my colleagues here at The Motley Fool are more optimistic in relation to its prospects.
