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For investors building a long‑term retirement income stream, the FTSE 250’s Harbour Energy (LSE: HBR) looks an intriguing candidate. It is already one of the very few FTSE stocks yielding over 10%, with analysts forecasting this will rise.
Those projections appear well-supported by exceptional earnings growth prospects, underpinned by a business that continues to deliver strong operational momentum.
So is there anything stopping me from buying the shares right now?
How solid does its earnings growth look?
Ultimately, earnings (profits) growth powers any company’s dividend yield higher over time. A risk to Harbour Energy’s are volatile commodity prices, which can make cash flows unpredictable even in strong operational years. Another is any further increase in the UK’s Energy Profits Levy, with the headline rate already at 78%.
That said, consensus analysts’ forecasts are that the firm’s earnings will grow by a whopping 77% a year over the medium term. This looks well supported by a transformational jump in production and revenue following the Wintershall Dea acquisition in September 2024.
Sharp rises in production and profits
Since the acquisition, Harbour Energy’s full‑year 2024 results, published on 6 March 2025, showed a 39% year-on-year output jump to 258,000 barrels of oil equivalent per day (boe/d).
Revenue soared 68% to $6.2bn (£4.6bn), while earnings before interest, taxes, depreciation, depletion, amortisation, and exploration expenses (EBITDAX) surged 48% to $4bn.
This momentum carried into the half‑year 2025 update on 7 August. Production leapt 207% to 488,000 boe/d, while operating costs fell 30% to $12.4 per boe. Revenue soared 179% to $5.3bn, and EBITDAX jumped 219% to $3.9bn.
Given its continued strong operational delivery and improved production and cost outlook, the company upgraded its free cash flow outlook. This is a key driver of earnings growth. It now expects free cash flow this year of $1bn against $0.9bn previously.
The half‑year results also included the launch of a $100m share buyback programme. These can support share price gains over time.
How much dividend income can I make?
Harbour Energy’s current dividend yield is 10.2%, although this can change on share price moves and annual payouts. In this case, consensus analysts’ forecast it will rise to 10.4% this year and hold there in 2027 and 2028. After that, forecasts become less reliable.
That said, using the lower 10.2% yield, my current £20,000 holding in the firm would make me £35,225 in dividends after 10 years. This also includes reinvesting these payouts back into the stock.
After 30 years on the same basis, the dividends would be £401,071. With the £20,000 investment included, the total value of the holding would be £421,071. And this would generate an annual dividend income in my retirement of £42,949 by that point!
My investment view
Overall, Harbour Energy looks like a rare income opportunity to me. The yield is already above 10%, and is backed by rapid earnings growth, rising production and improving free cash flow.
The Wintershall Dea acquisition has clearly transformed the business and the last three sets of results show a company delivering at scale while keeping costs under control.
The long‑term dividend maths also looks compelling to me, especially for investors focused on retirement income.
Given these factors, I will add to my holding in the very near future.
