When it comes to exploring income stocks, FTSE companies rarely disappoint. The London Stock Exchange is home to some of the most generous dividend-payers on the planet. And even after delivering superb capital gains in 2025, there remains an ample collection of high-yielding income opportunities to explore.
Among these stands FDM Group (LSE:FDM), with an impressive dividend yield of 11.7%! But is this too good to be true? Or is it a rare chance for investors to lock-in a double-digit passive income stream?
Inspecting the business
In a world of higher interest rates, businesses and governments are far more selective about where they deploy their capital. And this has translated into a massive list of projects being delayed, downsized, or even outright cancelled.
This has been particularly bad news for FDM Group, which specialises in supplying talent-as-a-service within the IT sector. The firm helps fill any knowledge gaps that enterprise customers need to implement or execute a project. But with most projects being scaled back, demand for FDM’s talent has plummeted.
In 2025, the number of consultants deployed shrank from 2,578 to 2,003 year on year. And looking further back, the drop is even more painful, with over 4,000 consultants placed with clients in 2021.
The result?
A painful 33.4% drop in revenue and a 69.2% collapse in adjusted pre-tax profits over the last four years. With that in mind, it’s not surprising to see the FDM share price struggle, driving up the dividend yield to enormous yields.
Are the winds changing?
As alluring as the group’s dividend yield seems, it’s essential for investors not to be tricked. Weaker sales and earnings throughout 2025 have translated into a 40% dividend cut. And looking at the full-year payout projections from analysts, FDM’s true yield is actually closer to 6%.
However, that’s still pretty substantial. And despite posting weaker earnings for 2025, FDM shares are actually up almost 20% since the start of 2026.
What’s going on?
The last four months of the year showed early signs of a cyclical shift in IT project spending. And this early momentum has continued into 2026, potentially placing FDM Group and its earnings on the road to recovery, with its dividends potentially on track to follow.
If that’s the case, investors could indeed still be looking at a lucrative passive income stock, with a cash-rich balance sheet and no debt.
What’s the verdict?
Even with encouraging early signs of a rebound, I’m not overly confident about FDM Group’s long-term prospects. While there’s no denying management has navigated through tough market conditions admirably, the long-term demand for IT consultants is currently under major disruption threats from evolving AI models.
The business may be forced to drastically pivot to avoid becoming obsolete in the coming years. And while this could prove successful, there’s nonetheless enormous execution risk involved. In the meantime, there are other income stocks offering similar yields whose future isn’t shrouded in such extreme uncertainty.
That’s why I’m hunting for dividend opportunities elsewhere.
