2025 proved to be a fantastic year for my Self-Invested Personal Pension (SIPP) portfolio. Despite exclusively containing UK dividend stocks, the outperformance of British shares last year supported a fantastic 26% total return. Yet one stock in particular stood out – Games Workshop (LSE:GAW).
After climbing yet another 40%+ over the last 12 months, the Warhammer creator continues to lead the charge as my largest SIPP holding. And with management raising dividends last year once again, the stock’s now generating close to a 6% yield for my portfolio – almost three times what investors can snap up today.
The question now becomes, will Games Workshop shares continue to surge even higher in 2026?
The bull case
At a forward price-to-earnings ratio of 34, last year’s stellar run has definitely attached a premium valuation to this business. However, in my opinion, it’s a justified one.
The company’s been consistently outperforming for more than five years in a row, continually delivering record revenue and profits. And that’s despite ultimately selling expensive discretionary products in a tough economic environment for many households across the UK and US.
As we move into 2026, there are several catalysts that could maintain this pattern. Its flagship Warhammer 40,000 tabletop game is expected to launch an 11th edition this summer. Why does that matter? Each new edition comes with a brand-new product cycle, including a flurry of new miniatures and starter kits that have a habit of flying off the shelves.
At the same time, while licensing revenues are expected to be lower this year, there could be some pleasant surprises in the second half.
After years of speculation, the video game Total War: Warhammer 40,000 has officially been confirmed with an expected release window of late 2026 to early 2027. Similarly, 2026 is also anticipated to see the release of Warhammer 40,000: Dawn of War 4.
Combining all this with longer-term IP projects with Amazon, the company could be rapidly approaching a critical inflexion point for high-margin/high-growth revenue diversification. And since these wider-reaching mediums often draw new players into its core tabletop wargaming products, Games Workshop looks set to maintain its dominant status with excessive pricing power and a cult-like fanbase.
What could go wrong?
Lofty valuations, even deserved ones, significantly narrow the margin for error and open the door to unpleasant volatility should something go wrong. And like all businesses, Games Workshop does have a few weak spots.
Licencing revenue can be exceptionally lumpy and is quite unpredictable. After all, if a video game or TV series underwhelms, the expected profits will likely fail to materialise.
This uncertainty also exists for its core miniatures business. If new miniature designs or army boxsets fail to resonate with new and existing customers, sales momentum could slow. And in both cases, it could cause the company to fall short of increasingly lofty investor expectations.
The bottom line
With Games Workshop already occupying the top spot in my SIPP, I’m not rushing to buy more shares simply from a risk and portfolio management perspective.
But for other growth investors who are comfortable with volatility, this business is definitely worth a closer look today, even with its premium price tag. And it’s not the only dividend-growth opportunity I’ve got my eye on right now.
