Royal Mail’s 7.2% dividend yield is now under threat

Royal Mail's dividend yield is coming under pressure as costs rise and delivery volumes fall. Profits are under threat, and investors can't take anything for granted, says Rupert Hargreaves.

Royal Mail postie emptying a letter box
Royal Mail staff have voted to go on strike over pay
(Image credit: © Oli Scarff/Getty Images)

The outlook is changing rapidly for Royal Mail (LSE: RMG). The last time I covered the stock at the beginning of this month, it offered one of the highest dividend yields in the FTSE 250 with analysts projecting a yield of 7.6% this year and 8.3% for 2023 (the firm’s 2024 fiscal year).

The City has been rushing to downgrade its projections over the past couple of weeks.

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Rupert Hargreaves
Contributor and former deputy digital editor of MoneyWeek

Rupert is the former deputy digital editor of MoneyWeek. He's an active investor and has always been fascinated by the world of business and investing. His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks.

Rupert has written for many UK and international publications including the Motley Fool, Gurufocus and ValueWalk, aimed at a range of readers; from the first timers to experienced high-net-worth individuals. Rupert has also founded and managed several businesses, including the New York-based hedge fund newsletter, Hidden Value Stocks. He has written over 20 ebooks and appeared as an expert commentator on the BBC World Service.