ASX Dividend Stocks: A 10-11% yielder that's become a dividend trap
IPH has crashed 37% while analysts stay bullish. At seven-year lows with 11% yields, is this value or a trap?
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Mentioned
KEY POINTS
- IPH has fallen from $8.30 in 2022 to $3.50 today, including an 18 day losing streak in September-October despite trading at its cheapest valuation in seven years.
- In FY25, Australian patent filings dropped 9% while the broader market fell just 1.7%, with over 700 clients migrating to competitors and September volumes down 11.3% as market share erosion accelerates.
- Analysts project 11-12% dividend yields with price targets up to $6.30, but ongoing structural challenges mean investors face a wall of worries.
I'm on a mission to uncover some of the market's most interesting dividend-paying stocks, providing readers with the key data and forecasts to make more informed decisions. Today, we're breaking down a potential dividend trap that's spiraled to seven year lows.
The warning signs are rather textbook: a price chart declining from top-left to bottom-right of your screen, along with an attractive trailing dividend yield. Simple to spot in theory, harder to resist in practice.
We've all felt that temptation, thinking the stock is "cheap" or "close to the bottom". But that's the problem with downtrends and deteriorating businesses. They don't collapse overnight. Instead, they deliver death by a thousand cuts. The share price dips from $10 to $9, fast forward twelve months and it's $8, a disappointing result takes it to $7, and so forth.
IPH (ASX: IPH) presents exactly this kind of conflicting picture, where the numbers tell a very different story than analyst expectations.
FY25 results trigger sharp selloff
Intellectual property services group IPH plunged 19.5% on its FY25 results announcement (21 August), as investors absorbed the reality of persistent structural problems in its core Australian and New Zealand operations.
The key takeaways from the result include:
Market share erosion intensifying. IPH's Australian filings dropped 9% year-on-year, while the broader market declined just 1.7%. Price increases delivered 1.1% like-for-like revenue growth in ANZ, but EBITDA still fell 2.4% as volume losses and client departures offset any pricing power.
Asia disappointed despite filing growth. Like-for-like revenue declined 0.6% and EBITDA fell 1.7%, even as patent filings across the region jumped 16.5%. The disconnect between filing activity and revenue recognition raised questions about timing and pricing dynamics.
Canada underperformed. Like-for-like revenue fell 1.3% and EBITDA dropped 5.4%, hampered by backlogs at the Canadian Intellectual Property Office and lower litigation volumes as cases settled.
While analysts noted that cost reductions, regional recovery potential (particularly Chinese filings), and strong 103% cash conversion offered some positives at current valuations, they acknowledged the structural challenges in ANZ would require a lot of patience.
An 18-day losing streak
Following the initial selloff and a brief consolidation, IPH fell for 18 consecutive trading days between 8 September and 1 October. (Yes, that's eighteen straight days)
IPH daily chart (Source: TradingView)
This relentless selling pressure suggests deep skepticism and absolutely zero dip buying. Even though the stock is trading at a seven-year low (and the cheapest multiple in seven years), no one wants to touch it with a ten-foot pole.
Analysts still bullish
Despite the price action, most analysts maintain positive ratings. Here's what major brokers said after the results (when shares closed at $4.32):
JPMorgan lowered target to $5.20, maintains Overweight: Falling Australian market share is a structural issue, cost synergies critical, cautious on ANZ growth, with potential recovery in Canada once CIPO issues resolve.
UBS lowered target to $6.30, maintains Buy: Structural ANZ growth challenges persist, US PCT filings a lead indicator, modest Asian revenue growth expected, cost-out and Canadian uplift partially offset earnings pressures.
CLSA raised target to $6.05, maintains Outperform: Asia filings recovery and Canada backlog fulfillment expected to drive higher earnings in FY26-27, despite continued ANZ market share losses.
Macquarie's forecasts project steady growth and dividends, with the stock trading at undemanding multiples:
FY25 | FY26e | FY27e | |
|---|---|---|---|
Revenue ($m) | 710.3 | 729.6 | 736.4 |
NPATA ($m) | 120.6 | 128.0 | 129.6 |
DPS (cents) | 36.5 | 39.5 | 39.5 |
Source: Macquarie, October 2025
However, Macquarie's October note also revealed that IPH's Australian volumes fell 11.3% year-on-year in September, continuing to underperform the market, which grew 7.1% over the same period.
The bottom line
IPH sits at an uncomfortable crossroads. The stock has fallen 29% year-to-date and 37% over the past twelve months, while the broader market is pushing all-time highs. This weakness has compressed IPH's price-to-earnings ratio to just 13.7x, down from levels around 20x for most of 2018-2024.
Current operational data shows ongoing structural challenges and deteriorating top-line metrics. Yet analyst models project stable growth over the next two years, implying dividend yields of 11-12%.
But this is a stock that's managed to fall all the way from $8.30 in 2022 to $3.50 today. What's to stop it trading with a '2' handle? While it may be closer to the bottom than the top, that offers little comfort if the business continues deteriorating. What's even worse is the prospect of dead money, watching your capital locked up in a share price that's going nowhere. Sometimes the real cost isn't catching a falling knife, it's the opportunity cost of holding it while better investments pass you by.
