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As many income investors know, the FTSE 100 hosts some of the UK’s most popular dividend shares. But I typically look further afield when hunting for the most rewarding yields.
On the mid-cap FTSE 250 or smaller AIM index, I tend to find higher yields on average. Yes, these require more careful consideration of the risks involved, but the pay-off can be lucrative.
Here are three high-yielding stocks worth looking at that have had a tough time since Covid. But now they not only offer lucrative income but exhibit signs of a potential recovery in the coming months.
Together, their average yield is 9.9% – almost three times that of the FTSE 100.
Reach
With an 11.5% yield, Reach (LSE: RCH) is the highest on my list. Usually, this would be a red flag – but I think this rare case is worth a closer look.
It’s backed by 11 years of uninterrupted payments and a low payout ratio of 46.4%. Cash coverage is a bit low at only 1.6 times but with earnings up 20% year-on-year, this might improve soon.
As a traditional publisher of newspapers and magazines, Reach has been stuggling to compete in an AI-driven world. As a result, profits took a big hit between 2021 and 2023, and the risk’s ongoing.
But more recently, things have improved, with its net margin rising from 3.78% in 2023 to 9.95% in 2024. If this trend continues, the recovery could deliver both growth and income for investors.
RWS Holdings
RWS Holdings (LSE: RWS) offers a very attractive 9.3% yield — still higher than what would usually be considered sustainable. In this case, there are some red flags. First, it’s unprofitable, posting a loss of £99.8m in its latest results.
Dividends are barely covered by cash (1.11 times) and payouts have declined 43.3% in the past year. So why do I think it’s still worth considering?
I see this one as a valuation play — with a forward price-to-earnings (P/E) ratio of 5.56, the growth potential’s compelling. Plus, it’s been paying dividends consistently and without fail for 22 years, which is encouraging.
But the key point of interest for me is a strategic pivot towards an AI-driven SaaS model, which is already bringing in fresh revenue. FY2026 guidance outlines margin expansion and further investment in innovation and efficiency. It remains a risky play but if it works, the returns could be spectacular.
NewRiver REIT
NewRiver REIT‘s (LSE:NRR) a small but up-and-coming real estate investment trust (REIT) that focuses on retail and leisure properties. It has the lowest yield on the list at only 9% but benefits from regulations that ensure 90% of profits are returned to shareholders.
This is worth considering for retirement investors aiming for passive income, as it can be highly reliable. But still, the company must have sustainable earnings or it risks a dividend cut.
In NewRiver’s case, there are still risks but they look manageable. The UK property market faces headwinds from higher interest rates, increased taxation on landlords and high-value properties.
Revenue’s up 84% year-on-year and earnings 54% ahead — impressive numbers, especially considering the challenging economic conditions in 2025. Plus, the valuation looks decent, with a forward P/E of 9.2 and it has a 15-year track record of paying dividends.
