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The FTSE 250 is filled with dividend shares. In truth, as I write in early September, the index is yielding 3.38%. Maybe surprisingly, this can be a tiny bit larger than the three.36% provided by the FTSE 100.
A few of this differential may be defined by share buybacks. To date in 2025, as a substitute of returning money on to shareholders, members of the Footsie have spent £39bn shopping for their very own shares.
Even so, these trying to enhance their incomes — with money of their palms — may take into account taking a better take a look at among the highest-yielding FTSE 250 shares.
A rising yield
One instance is Ithaca Vitality (LSE:ITH), the North Sea oil and gasoline producer, which has had a turbulent week.
Its shares fell closely after its two of its largest shareholders — DKL Vitality and Eni UK — introduced on 2 September that they’d offered 3% of the group to institutional buyers at a ten% low cost to the prevailing share worth.
Throughout the next 4 days, the share worth tanked greater than 18%.
For brand spanking new buyers, this implies the inventory’s yield has elevated additional. Already among the best on the index, it’s now providing a return of 12.4%.
Nevertheless, in its brief existence (the group’s solely been listed since November 2022) its dividend has confirmed to be erratic. That is typical of the vitality sector the place earnings may be risky.
| 12 months | Dividends per share (cents) |
|---|---|
| 2023 | 39.63 |
| 2024 | 34.04 |
| 2025 (to five September) | 10.10 |
Serving to to repair the nation’s funds
One other main downside for the group is that income made within the North Sea are topic to an efficient company tax price of 78%. A windfall tax means the sector’s being closely squeezed by the federal government.
The affect of this may be seen from Ithaca’s outcomes for the six months ended 30 June. Throughout this era, the group reported a revenue earlier than tax of $513m however its tax cost was an eye-watering $731m. It is a tax price of 143%.
Nevertheless, among the cost consists of deferred tax ($292m). This isn’t payable till a later date — presumably a few years into the longer term — although it’s proven to cut back this yr’s post-tax earnings.
Fortuitously for earnings hunters, the group stays money generative. Though dividends are a distribution of an organization’s revenue to shareholders, they’re paid utilizing money. So these wanting to know how safe the group’s dividend is ought to check out its cash-generating potential. Through the first six months of 2025, its working money movement was $1bn. This helped scale back its web debt by $214m.
And a collection of acquisitions means the group’s manufacturing was 133% larger in comparison with the identical interval in 2024. Ithaca plans to return $500m to shareholders in respect of its 2025 monetary yr. And on account of its “glorious operational efficiency” it not too long ago introduced that it’s going to deliver ahead the timing of its subsequent two dividend funds.
The business is lobbying laborious to influence the federal government to introduce an alternative choice to the vitality income levy. We are going to know in November whether or not the Chancellor is sympathetic. Till then, even with oil and gasoline costs at comparatively low ranges, Ithaca Vitality seems to be doing nicely. It may very well be one for earnings buyers to think about.
