Earning a double-digit dividend yield from FTSE income shares would be awesome. The trouble is, this level of payout’s rarely sustainable.
However, every once in a while, a surprising exception emerges. Investors can underestimate a business, send its share price crashing and the yield flying, only for it to then suddenly bounce back, making the smart investors who spotted the opportunity a lot of money.
Today, FDM Group (LSE:FDM) seems to satisfy the first half of this narrative. Its share price is down a whopping 60% since January, and the dividend yield now sits at 14.6%. The only question is, can it deliver the rare explosive comeback that could make investors today much richer?
What’s behind the fall?
As a quick crash course, FDM Group’s an IT consultancy business. It hires fresh university graduates, upskills them in mission-critical technologies like cloud computing and cybersecurity, then ‘leases’ out this talent to businesses as well as governments.
In a world of constant innovation and technological complexity, having the right know-how’s essential. But the trouble is, demand’s only as strong as its customers’ wallets. And right now, with all the economic uncertainty, small- and medium-sized businesses are seemingly reluctant to invest in new IT systems.
For FDM, this has been a bit of a disaster. The number of its consultants assigned to clients has drop 37% year on year across the first half of 2025. Combined with a lack of new contract growth, revenue over the period tumbled 31% with pre-tax profits taking an even harder 48% hit.
With that in mind, seeing a sharp sell-off in the share price isn’t very surprising.
A hidden opportunity?
As a result of this performance slump, FDM Group shares now trade at a pretty undemanding price-to-earnings ratio of 9. And with the stock near a 52-week low, the company’s now firmly within value territory, especially if its recent stumbles are cyclical rather than structural.
IT modernisation, digitalisation, and cybersecurity remain long-term priorities for both businesses and governments alike. And should the economic landscape improve over time, demand for FDM’s talent pool could bounce back with the potential for rapid margin recovery.
In the meantime, its balance sheet remains well funded with £34.6m of cash & equivalents with no debt in sight.
The bottom line
FDM’s sturdy balance sheet is an encouraging sign. But to maintain its high yield, the group’s cash flow needs to be sturdy as well. And right now, that’s simply not the case.
The group’s interim dividend has already been slashed due to weakened earnings. And with a cyclical rebound not expected until as early as mid-2026, there’s a good chance of another dividend cut on the horizon, in my opinion.
That’s why, for now, FDM’s staying on my watchlist, and I’m hunting for other income shares instead.
