Investors craving energy plays in 2025 may wish to consider this 8%-yielding UK stock

Harbour Energy is a UK stock with a diversified portfolio and yield level that may appeal to investors seeking traditional energy plays this year.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Traditional energy companies have been buoyed by rising prices and Donald Trump’s pro-oil US presidency at the start of the year. In this market climate, high-yield UK stock Harbour Energy (LSE: HBR) might be an option to consider for those eyeing returns as well as price appreciation.

Admittedly, the field of energy companies wooing investors is very competitive these days. It doesn’t help that Harbour Energy grabbed headlines due to its North Sea exposure. Operators, like the company, were clobbered last summer with heavy taxation by the UK’s Labour government for North Sea production.

But there’s more to the company and its performance.

Created with Highcharts 11.4.3Harbour Energy Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Not just the North Sea

At the start of 2025, Harbour Energy remains the largest London-listed independent oil company. It has a geographically diverse portfolio comprising assets in Argentina, Mexico, North Africa and Southeast Asia. These sit alongside assets in Germany, and British and Norwegian North Sea holdings.

The company’s current global production level is around 475,000 barrels of oil equivalent per day, enabling it to offer income-chasing investors a near 8% yield.

A well-respected board and CEO Linda Cook have overseen its expansion over the last four years via both organic and acquisitive growth. Their latest strategic play was the acquisition of Wintershall Dea last year for $11.2bn.

Operational discipline

In the six months to January, marked by declining oil prices, Harbour Energy saw its share price fall by around 5%. But over the same period, this compares favourably with its peers along with UK majors Shell and BP, with both posting declines of 3% and 6% respectively.

The first three weeks of January also saw Harbour Energy’s share price rise by 11%, bringing it close to the 300p mark. It hit a 52-week high of 333p in May before oil price volatility and changes to North Sea taxation knocked investor confidence.

Harbour Energy has since been trying to regain it. The company’s net debt has decreased significantly in recent years. It expects to have a net cash position by the end of 2025. Unsurprisingly, dividends have slowly but steadily increased since March 2022.

Market rumours are also rife about Harbour Energy moving its primary listing to the US, giving the energy stock further positive vibes. The company has dismissed the rumours. Instead, it is pursuing an investment-grade credit rating (i.e. bond or other form of debt vehicle / security with a low default risk), through financial and operational discipline.

What’s not to like?

There is a lot to like about Harbour Energy, but caution is still merited. As trading in 2024 demonstrated, direction of oil and gas prices will impact the company’s share price no matter how operationally disciplined it is.

A US listing, should it happen, is not always a one-way ticket to a higher valuation, as Diversified Energy Company recently found out. Some may also find Harbour Energy’s risk versus reward profile to be too timid or conservative, with other small-to-mid sized oil and gas stocks offering greater potential for price appreciation.

On balance, this high-yield energy midcap UK stock with a low risk profile strikes the right note for me, and I will be adding more of it to my portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Gaurav Sharma owns shares in Harbour Energy. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

I’ve been snapping up shares in this 11.6% yielding FTSE 250 growth stock

As a trade war knocks a quarter of the value off this FTSE 250 asset manager in a few days,…

Read more »

Investing Articles

I asked ChatGPT which FTSE 100 stocks are screaming buys for Trump’s tariff war. Here’s what it said

As the trade war heats up and the sell-off in stocks resumes, Paul Summers is looking for great FTSE 100…

Read more »

Investing For Beginners

Analysts now expect up to 4 UK rate cuts this year! Here’s what it could mean for the FTSE 100 index

Jon Smith points to the rapidly shifting market expectations when it comes to UK interest rates and explains the impact…

Read more »

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.
Investing Articles

The JD Sports share price is up 10% on today’s upbeat results but still dirt cheap with a P/E of just 5.2!

Harvey Jones is thrilled to see the JD Sports Fashion share price rocket following an impressive set of results given…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Cheaper by a third, is Apple stock now a bargain?

Apple stock has fallen steeply of late. This writer would happily invest in the iPhone maker at the right price.…

Read more »

Investing Articles

Up 60%! See the stunning easyJet share price forecast for 2025

Harvey Jones is impressed to see just how high forecasters expect the easyJet share price to fly over the next…

Read more »

Investing Articles

The BP share price hits a 3-year low. Time to buy?

The BP share price has been trading at levels last seen three years ago, with a 7%+ dividend yield to…

Read more »

Investing Articles

Last week, Rolls-Royce shares were the most popular on this investor platform. But there’s a catch!

Those using the Hargreaves Lansdown website bought more Rolls-Royce shares than any other UK stock last week. But this isn’t…

Read more »