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Primarily based on payouts over the previous 12 months, Harbour Vitality (LSE:HBR) is among the finest dividend shares on the FTSE 250. Attributable to its beneficiant yield, it sits comfortably inside the prime 10% of shares within the UK’s second tier of listed firms.
And following the acquisition of belongings beforehand owned by Wintershall Dea, it’s now the biggest oil and gasoline producer within the North Sea. This transformational deal, which was accomplished in September 2024, means the group now has the monetary firepower to additional enhance its dividend.
Certainly, the corporate intends to pay $380m to legacy shareholders over the subsequent 12 months. At present (9 January) alternate charges, this equates to 21.5p (26.4 cents) a share. On the time of writing, Harbour Vitality’s shares are altering arms for round 265p. This means a yield of 8.1%, greater than twice the FTSE 250 common.
However returns to shareholders are by no means assured, notably within the oil and gasoline sector. Earnings will be risky, which suggests dividends can fluctuate considerably from one interval to a different.
Nonetheless, in it’s brief existence as a listed firm, Harbour has a powerful report of steadily rising its payout (see desk under).
| Monetary 12 months | Dividend sort | Dividend per share ($) |
|---|---|---|
| 2021 | Ultimate | 0.11 |
| 2022 | Interim | 0.11 |
| 2022 | Ultimate | 0.12 |
| 2023 | Interim | 0.12 |
| 2023 | Ultimate | 0.13 |
| 2024 | Interim | 0.13 |
Extra earnings
Undoubtedly, this has been made doable by spikes in wholesale oil and gasoline costs, notably in 2021 and 2022.
However this can be a double-edged sword.
In response to public stress, the earlier authorities launched a ‘windfall tax’, formally generally known as the Vitality Income Levy (EPL). Not surprisingly, the corporate’s share worth has been steadily declining because the Might 2022 announcement.
Subsequent will increase imply the group now faces an efficient company tax fee of 78% on its earnings derived from the UK Continental Shelf.
Partially, this explains the acquisition of Wintershall Dea’s oil and gasoline fields. None of those are in UK waters, due to this fact the EPL doesn’t apply. And because of the deal, the group is now producing 90% greater than beforehand. This provides me some confidence that it may possibly proceed to develop its dividend.
Commodity costs
Present laws means the EPL will stay till 31 March 2030. However there are provisions for it to be scrapped.
On the one hand, a falling oil and gasoline worth would injury income. Nonetheless, if (for six consecutive months) the common month-to-month oil worth falls under $71.40 — and the gasoline worth goes underneath 54p a therm — the ‘windfall tax’ will likely be abolished.
However this seems unlikely to occur any time quickly.
Though Brent crude is falling, it nonetheless stays above the value flooring.
And I’m wondering if gasoline costs will ever drop under 54p once more.
For my part, it appears to be like as if the EPL is right here to remain.
My opinion
Regardless of this, I plan to maintain my Harbour Vitality shares.
That’s as a result of I feel diversifying away from the UK is an effective transfer.
And though it’s inconceivable to precisely predict future power costs, the extra earnings earned exterior of Britain’s waters ought to assist be certain that the group is ready to — at the least — keep (in money phrases) its beneficiant dividend.
