Dividend investing has always been a balancing act. On the one hand, rising share prices are a welcome sign of confidence in the market. On the other, they can strip formerly attractive FTSE shares of their once-generous yields. Many popular dividend names now look stretched, leaving income investors in search of alternatives.

British American Tobacco is a good example. Once considered a dividend darling, its yield has now slipped below 6% while its price-to-earnings (P/E) ratio has ballooned above 28. That looks expensive for a business still wrestling with declining cigarette demand and regulatory hurdles.

Property stocks have been another option, with firms like Primary Health Properties offering a near-8% yield. But a weak housing market has pressured profits and, more worryingly, dividends aren’t well-covered. That raises the possibility of cuts at precisely the time income investors are relying on them most.

Among this mix of overvalued blue-chips and shaky property stocks, one lesser-known FTSE share has caught my attention. It combines a reasonable valuation with a reliable, well-covered dividend that looks worth checking out.

Modern marketing

Next 15 Group (LSE: NFG) isn’t a household name, but it’s been around for more than 40 years. The company is a brand growth agency offering digital content, marketing, PR, software, research and communications. Its decentralised model is pitched as “tech-led, digital-first and data-voracious,” but underneath the jargon is a simple idea: a nimble marketing business that claims it can adapt faster than larger rivals in an AI-driven world.

The challenge is that its share price hasn’t reflected that promise. In late September 2024, the stock crashed by around 50% after losing one of its largest clients, which chose not to renew a three-year contract. That shook investor confidence, and even today, the share price remains down 41.9% over the past five years.

On the flip side, the decline has created value. Next 15 now trades on a forward P/E ratio of just 6.55, which looks cheap compared to other FTSE-listed marketing and tech firms. The dividend yield sits at 5.4%, not the highest on the market but certainly respectable. More importantly, it’s supported by a payout ratio of only 39% and backed by over two decades of consistent payments.

For income seekers, that makes it a stock worth thinking about.

Next 15 isn’t in perfect health. Earnings dropped sharply between H2 2023 and H2 2024, falling from £38.64m to £17.33m. Debt is also climbing, now at £150m – more than double its free cash flow. That means if profits don’t stabilise soon, pressure could mount on the balance sheet.

Still, the firm remains impressively profitable, with a return on equity (ROE) of 23.4%. Debt is covered by equity, and with £50m in cash and equivalents, it has some breathing space. The dividend, at least for now, looks well-supported.

My verdict

This isn’t a risk-free play. Competition in marketing and brand management is intense, and Next 15 must demonstrate its ability to integrate AI effectively while maintaining margins. But in a market where many FTSE shares now look overvalued or stretched, I think it’s one to weigh up.

The yield is covered, the valuation is attractive, and the long payment track record is reassuring. For those building a diversified income portfolio, it’s a FTSE share worth considering.