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The FTSE 250 is stuffed with dividend shares. The truth is, as I write in early September, the index is yielding 3.38%. Maybe surprisingly, this can be a tiny bit increased than the three.36% provided by the FTSE 100.
A few of this differential might be defined by share buybacks. To this point in 2025, as an alternative of returning money on to shareholders, members of the Footsie have spent £39bn shopping for their very own shares.
Even so, these trying to increase their incomes — with money of their palms — might think about taking a better have a look at a few of the highest-yielding FTSE 250 shares.
A rising yield
One instance is Ithaca Vitality (LSE:ITH), the North Sea oil and fuel 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 that they had bought 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 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%.
Nonetheless, 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 power sector the place earnings might be risky.
| Yr | 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 drawback for the group is that earnings made within the North Sea are topic to an efficient company tax fee of 78%. A windfall tax means the sector’s being closely squeezed by the federal government.
The influence 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. This can be a tax fee of 143%.
Nonetheless, a few of the cost consists of deferred tax ($292m). This isn’t payable till a later date — presumably a few years into the long run — although it’s proven to scale back this 12 months’s post-tax earnings.
Thankfully for revenue 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 circulate was $1bn. This helped cut back its web debt by $214m.
And a sequence of acquisitions means the group’s manufacturing was 133% increased in comparison with the identical interval in 2024. Ithaca plans to return $500m to shareholders in respect of its 2025 monetary 12 months. 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 trade is lobbying exhausting to influence the federal government to introduce a substitute for the power earnings levy. We’ll know in November whether or not the Chancellor is sympathetic. Till then, even with oil and fuel costs at comparatively low ranges, Ithaca Vitality seems to be doing properly. It could possibly be one for revenue buyers to contemplate.
