Up 120% this year! How is this dividend share still undervalued?
A high-yielding dividend share that’s enjoyed significant price growth is a rare thing. Even more rare is one that still looks undervalued after such a feat.
So you’ll understand my surprise when I came across just that — a relatively small £509m agriculture stock that’s crushing big FTSE 100 names.
I had to dig deeperâ¦
A major oil producer (not that oil)
Anglo-Eastern Plantations (LSE: AEP) has emerged as one of the most remarkable success stories on the London market this year. With dividends, itâs achieved an astonishing 120% in 2025. Such growth would’ve turned a modest £5,000 investment on New Yearâs Eve into roughly £11,000 today.
Thatâs a £6,000 profit in just 10 months — an extraordinary feat for what many investors might once have dismissed as a sleepy agricultural stock.
The company, headquartered in London, operates mainly across Indonesia and Malaysia, where it cultivates and processes palm oil and rubber. Palm oil remains its core business, used in everything from food manufacturing to cosmetics and biofuels.
With global demand for vegetable oils surging and El Niño weather patterns constraining supply across Southeast Asia, palm oil prices have risen sharply. This has been a key driver of Anglo-Easternâs explosive share price growth.
Will it keep going?
What makes this rally particularly impressive is that it isnât built on pure speculation. The companyâs earnings have actually kept pace with the stockâs performance.
In its latest half-year results, it reported a 70.3% year-on-year increase in earnings, driven largely by surging prices but also disciplined cost management (revenue in the same period only grew 35.3%).
That kind of growth helps justify the low valuation, suggesting the rally reflects real operational strength rather than just market hype. Even if the growth slows, the 5% dividend yield could deliver decent returns in the meantime.
Critically, it’s paid uninterrupted dividends for two decades and increased them every year for the past five. Furthermore, cash flow covers payments an unprecedented 20-fold, so no reason to fear a near-future cut.
A volatile industry
Naturally, when a company’s profits are driven by external factors, caution is warranted. Palm oil prices are notoriously volatile, and a reversal in commodity trends could quickly squeeze margins.
In the past, the stock has rapidly doubled in price, only to crash back lower in the following months. So investors considering the stock will need to accept that it might be a bumpy ride.
Still, Anglo-Eastern stands as a rare example of a small-cap agricultural stock delivering both growth and value. But more importantly, its soaring share price appears well-supported by solid fundamentals.
The bottom line
For most UK investors, Anglo-Eastern would probably be an unusual choice. It seems hard to find a place for it among the finance giants, tech start-ups and energy stocks of the FTSE 100.
However, I think it’s still worth considering because it ticks a lot of boxes: a strong balance sheet, minimal debt, consistent cash generation and a history of stable and reliable dividends.
Plus, its conservative management approach has capitalised on favourable market conditions without over-extending financially — a combination that many commodity producers struggle to maintain.
But for those looking for something closer to home, the FTSE 100’s recent record high suggests a lot of other opportunities exist on the UK market.
The post Up 120% this year! How is this dividend share still undervalued? appeared first on The Motley Fool UK.
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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
