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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, theyâve 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 WPPâs financials. They donât 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, itâs sitting at levels last seen more than 20 years ago.
As for the stockâs price-to-earnings (P/E) ratio, itâs 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 wouldnât 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.
Itâs 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 itâs 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.
The post Thank goodness I sold dividend stock WPP a few years ago appeared first on The Motley Fool UK.
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More reading
- At a 27-year low, will this once-grand FTSE 100 giant be relegated to the FTSE 250 soon?
- Down 53% in six months! Is this FTSE 100 stock one for value investors to consider?
- WPP could soon cease being a dividend stock. But after falling 63% in a year, does it offer great value?
- These 3 FTSE shares have crashed hard. Which do I like today?
- Thank goodness I didnât invest in WPP a year ago when the share price was 827p!Â
Edward Sheldon has no positions in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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