Image source: Getty Images
How often do we find a North Sea oil company making fat profits, with its share price up over 40% in a year, and still offering one of the biggest payouts from dividend stocks on the market?
Looking through some of the most-bought dividend stocks in ISA accounts in September, my eyes fell on Ithaca Energy (LSE: ITH). And that’s the one I’m talking about, with a forecast yield exceeding 11%. Should investors think about buying in October? Let’s dive in…
Soaring oil profits
In the second quarter of 2026, Ithica achieved a record output of 131,000 barrels of oil equivalent per day (kboe/d), and said it’s on target for 120-130 kboe/d for the full year.
That helped generate EBITDAX — a modified EBITDA excluding exploration expenses, used in the oil and gas industry — of over $1.1bn in the half. In turn, net cash flow from operating activities came in at $955m. And the board raised its full-year dividend guidance to a total payout of between $500m and $530m.
In the words of management…
We remain focused on maximising long-term value creation and delivering attractive, sustainable returns for our shareholders.
Executive Chairman Yaniv Friedman, 19 August 2026
Get it while it’s hot?
The company’s policy seems to be… pump and sell as much oil as possible while prices are high, and fill shareholders’ pockets with the proceeds. As a dividend investor myself for many years, I can’t find a lot to complain about there.
Saying that, potential investors need to keep a key thing in mind. These current big dividends are very much geared to the price of oil.
Future prices will surely be lower, and there may not be the same cash from each barrel to go towards the dividend. In fact, analysts are already forecasting a lower payout by 2028.
Back in 2022, Ithaca paid no dividend. And in 2025, we saw a loss per share. So things can be erratic, and smaller oil companies rarely offer a smooth ride. See the share price rise in the chart above? The next five years might not be so good.
What’s my bottom line?
I’ve bought shares in companies like this the past. And my record with them has been mixed, with one or two significant losses along the way. I’ve had profits too, mind, especially from ones that fit my liking for dividends.
I’m considering putting a small amount into Ithaca, and other investors might do well to think about it. We do, though, need to beware that the short-term road for this kind of stock can sometimes be a rocky one.
And I’ve only ever put a relatively small portion of my Stocks and Shares ISA cash into any one sector. So I’ve still been able to sleep at night. If I buy Ithaca shares, my main focus is still on diversified dividend stocks, including one very tasty prospect…
What income stock do we like better than Ithaca Energy Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
Alan Oscroft does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
