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FTSE 250 natural gas giant Energean (LSE: ENOG) has edged higher over the past month or so. But the real story sits beneath the share price.
After years of heavy investment in its flagship gas projects, it is now shifting decisively into a higher‑margin, cash‑generating phase.
Recent results show revenue softening but profitability strengthening — a classic sign that the most capital intensive part of the cycle is behind it. And this transition should continue to support its ultra-high dividend yield, in my view.
So how much income could it generate over 10- and 30-year investment cycles?
Transition seen in the results
Energean’s full‑year 2024 results saw revenues up 25% year on year to $1.78bn (£1.32bn). Adjusted earnings before interest, taxes, depreciation, amortisation, and exploration expenses (EBITDAX) rose 25% to $1.16bn.
Meanwhile, production increased 24% to 153,000 barrels of oil equivalent (kboed), and operating cash flow surged 71% to $1.12bn. Net profit edged up to $188m, while leverage (net debt/ adjusted EBITDAX) fell from 3x to 2.5x.
With $20bn in long‑term gas contracts and core Israeli assets performing strongly, Energean entered 2025 as a maturing, cash‑generative business with dividend‑supporting momentum.
Its H1 2025 results reinforced this resilience, despite geopolitical disruption during the Israel/Iran conflict. Profit after tax rose 24% to $110m, while operating cash flow rose 5% to $555m. The company reaffirmed guidance for 145-155 kboed production.
It now has $1.175bn in liquidity and long‑term contracts. This makes it well‑positioned to sustain its dividend and unlock further value from its core Israeli assets.
A risk to this is any prolonged period of bearish gas prices. However, consensus analysts’ forecasts are that Energean’s earnings will grow 12.5% a year to end-2028. And it is ultimately this that powers any company’s dividends over time.
How much income can it generate?
Given its recent share price gains, Energean’s dividend yield has eased, albeit only to a still-remarkable 9.9%. This is more than triple the FTSE 100’s 3.1% average and over twice the FTSE 250’s 3.5%.
Analysts forecast that the payout to hover around 10% over the next three years. This could change over time, if the annual payout and/or the share price fell (which they could).
Nevertheless, using the current 9.9% yield, investors considering a £5,000 holding could make £8,402 in dividends after 10 years.
This also reflects the dividends being reinvested back into the stock — known as dividend compounding. It is a similar idea to leaving interest to quietly grow in a bank savings account.
On the same basis, the dividends would rise to £91,279 after 30 years. Including the original £5,000 investment, the holding would be worth £96,279 by then. And that would generate a yearly dividend income of £9,532 at that stage!
My investment view
Energean’s rising cash flow, long‑term gas contracts and near‑double‑digit yield make it a terrific income play, in my book.
That said, I cannot allow myself to buy it yet as I already own three other energy stocks — BP, Shell, and Harbour Energy. So adding another would skew my portfolio’s risk/reward balance.
Even so, its strong earnings growth prospects and ultra-high dividend yield look extremely compelling. Consequently, I think it is well worth considering for investors without my level of sector exposure.
