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Looking for dividend income? One well-known FTSE 250 share offers a dividend yield north of 6% right now, but sells for a fairly undemanding 11 times earnings.
Could it be worth considering for its passive income potential?
Well-known DIY name
The share in question is Wickes (LSE: WIX), the home improvement retailer that serves both trade and DIY customers.
Its share price has fallen by more than a fifth over the past year. Last year the company kept its dividend flat.
Taken together, that explains why the yield has moved higher over the past 12 months and is now well above the FTSE 250 average.
Still, although Wickes is a widely-known brand, that one-year share price slump potentially looks alarming. Over five years too, the Wickes share price has fallen, by 34%.
Between a falling share price and flat dividend (albeit at a high yield), could the market be pricing in weakening expectations for the company?
A tough market that could get tougher
I think so.
In a trading statement covering the first 17 weeks of this year released last week, Wickes reported year-on-year revenue growth of 1.3%.
That is weak, but it is still growth.
However, it was not an even performance. Behind the headline figure for the whole company, the design and installation business put in a stronger performance but the retail business actually saw like-for-like sales falling 2%.
The company said that retail revenues were “broadly maintained” (not how I would characterise a 2% decline), pinning the slightly weaker performance on “exceptional rainfall” dampening shoppers’ enthusiasm for outdoor furniture.
Meanwhile, although revenues fell slightly, sales volumes in the retail business actually rose. The discrepancy comes from deflationary pricing. Cheaper prices may help boost customer demand, but are a risk to Wickes’ profit margins.
Still, I do not think the recent share price weakness is primarily explained by the sales performance so far in 2026, or even the outlook for profit.
Rather, I reckon investors are nervous about what weak consumer sentiment and softness in some parts of the housing market could mean for customer demand. An additional risk is what geopolitical issues may mean for product costs.
I do not see these problems as being specific to Wickes though. They pose a threat to building supplies and DIY retailers more widely. Still, I think they help to explain current weakness in the share price.
Looking at the long-term income potential
So, from the perspective of a long-term investor, I continue to see Wickes as a solid operator with a proven business model.
Over time, if it can continue to generate sizeable free cash flows, that 6.3% yield looks attractive.
Dividends are never guaranteed at any company, of course. But I think this FTSE 250 dividend share has a lot to like and see it as one for investors to consider.
Should you invest £5,000 in Wickes Group Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Wickes Group Plc made the list?
Christopher Ruane has no position in any of the shares mentioned.
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