It is now the largest London‑listed independent energy company, with significant positions across Norway, the UK, Germany, Mexico, Argentina, Africa and Asia. That gives it a breadth and depth of exposure that is highly unusual for a company of its size.

Yet the market still seems to be pricing Harbour as if it were the old, UK‑bound business. This has left the shares looking substantially underpriced to their ‘fair value’. And while investors wait for this gap to close, the company offers a high dividend yield to long‑term shareholders.

So, how much can I make from the stock?

Dividend yield potential?

Harbour paid a 21-cent (16p) dividend in 2025, giving a current dividend yield of 5.6%. By comparison, the FTSE 100’s present average is 3.1% and the FTSE 250’s is 3.4%. But analysts forecast Harbour’s dividend yield will rise to 6.3% by end-2028.

So, my £20,000 holding in the shares would potentially make me £17,490 in dividends after 10 years and £111,734 after 30 years. This period is regarded as a standard investment cycle for long-term investors, although a company can change in three decades, of course.

The numbers assume the forecast 6.3% yield as an average, although this can go up or down over time. It also factors in the dividends being reinvested back into the stock to capture the power of ‘dividend compounding’. This is like leaving interest to accrue in a bank savings account, and it has a turbocharging effect on dividends.

After 30 years on this basis, the total value of my holding could be £131,734. And this could be paying me an annual income from dividends alone of £8,299, but inflation will reduce its spending power.

Share price potential?

Price and value are different measures in stocks. The former is whatever the market will pay at any moment, but the latter reflects the underlying business’s fundamentals.

The difference between the two is crucial for the profits of long-term investors over time. This is because asset prices can converge to their ‘fair value’ over the long run.

A risk to Harbour is any sustained period of low oil and gas prices, which could squeeze its margins. Another is any operational disruption across its geographically diverse portfolio that could affect production.

That said, discounted cash flow (DCF) analysis identifies where any stock should trade by projecting future cash flows and ‘discounting’ them back to today.

Some analysts’ DCF modelling is more bearish than mine. However, based on my DCF assumptions — including a 7.7% discount rate — Harbour shares are 61% undervalued at their £2.88 price.

This implies a fair value for the shares of around £7.38 — more than double where they trade today.

That gap suggests a potentially tremendous buying opportunity to consider, if those DCF assumptions prove accurate.

My investment view

Given its high yield and undervalued stock — supported by analysts’ earnings growth forecasts of 34% a year over the medium term — I will add to my holding soon.

I also think the combination of global diversification and strong cash generation merits the attention of other investors.

The post I’m targeting an £8,299 annual income from £20,000 in this transformed FTSE energy star! appeared first on The Motley Fool UK.

It offers a dividend yield that towers over most FTSE firms. And it has undertaken a compelling shift in its business in the past couple of years.

That combination gives Harbour a profile that is far more interesting than a simple ‘high‑yield oil stock’ label might suggest.

So, how much can I make from the stock?

Growth drivers

Earnings growth drives any firm’s dividends and share price over the long run. A risk to these for Harbour is a prolonged bearish trend in oil and gas prices. Analysts’ consensus forecasts are that its earnings will grow by a whopping annual average of 92.5% over the medium term. But this cannot be guaranteed, especially doing periods of volatility, such as now.

Still, Harbour’s earnings momentum is underpinned by a record step‑change in production following the acquisition of Wintershall Dea in September 2024. Its 2025 results saw output surge to 474,000 barrels of oil equivalent per day (kboe/d)versus 258 kboe/d a year earlier. This was supported by new wells across the UK, Norway, Argentina and Egypt.

Margins have strengthened thanks to a 22% reduction in unit operating costs to $12.8 (£9.6)/boe. This reflected the benefits of scale, portfolio mix and ongoing cost discipline.

Meanwhile, earnings before interest, taxes, depreciation, depletion, amortisation and exploration expenses rose 76% to $7.2bn. This came on the back of higher volumes and firmer European gas prices.

Free cash flow also surged to $1.1bn, enabling meaningful net‑debt reduction. It also underpinned management’s updated distributions policy, which targets returning 45%–75% of free cash flow to shareholders.

Production guidance has been reaffirmed at 475–500 kboe/d for 2026, and long-term output is expected to remain at this level through 2030.

Together, these factors enable Harbour to continue into 2026 with stronger cash‑generation visibility and a more robust platform for future shareholder returns.

How much dividend income can I make?

Harbour’s current dividend yield is 7%, given the present £2.89 share price, although returns can go up and down, as share price and annual payouts alter.

Harbour’s present yield is more than double the current FTSE 250 average of 3.4% and the FTSE 100’s 3.1%.

My £20,000 holding in the stock would make me £20,193 in dividends after 10 years and £142,330 after 30 years.

This assumes the 7% dividend yield across the period, and the payouts being reinvested to utilise the turbocharging effect of dividend compounding.

After 30 years on this basis, the value of my holding could be £162,330 (including the original £20,000 investment). And this would pay me £11,363 a year in dividend income!

My investment view

Harbour’s business is larger, more diversified and more resilient than it was a few years ago. And the shift into longer‑life, higher‑margin assets gives it a stronger platform for future cash generation.

With production scale rising, costs improving, and the balance sheet strengthening, the dividend is well supported by underlying earnings power.

Given this, I will be buying more of the stock very soon. And for investors seeking a high yield backed by strong growth, I think Harbour is worth considering.

The post Here’s how I’m targeting £11,363 a year in dividend income from £20,000 in this FTSE high-yield gem! appeared first on The Motley Fool UK.

Mixed news

This week (5 March), Harbour Energy (LSE:HBR) released its 2025 results. The energy group’s boss declared that “significant progress” had been made during the year.

But a few months ago, the group said it was introducing a new distributions policy. Often, this is a sign that a cut’s coming. After all, if it was going to be good news, why wait to announce it? Therefore, it didn’t come as much of a surprise when the group unveiled a 2025 full-year reduction in its dividend to 21.24 cents. Compared to 2024, that’s an 18.9% cut.

For 2026, the group’s planning to pay a “base dividend” of 16.1 cents a share ($300m) with the intention of returning 45%-75% of free cash flow (FCF) to shareholders. This implies a forward yield of 4.2%. Twelve months ago — as a reminder that high yields should be viewed with caution — the stock was offering a return of over 10%.

However, there are three reasons why I plan to keep my shares and why I believe others could consider adding some to their own portfolios. Although I acknowledge the sector doesn’t appeal to everyone.

1. Debt reduction

Going forward, the group wants to reduce its gearing, which is likely to reduce borrowing costs and improve investor sentiment.

For as long as the group’s ratio of net debt to EBITDAX (earnings before interest, tax, depreciation, amortisation, and exploration costs) is above one, it will pay a dividend at the lower end of its stated range. Below one and it will “pay out towards the top end”.

Due to acquisitions, gearing’s expected to be around one until the end of 2028.

2. Expansion

The group’s continuing to move away from its North Sea roots, where its earnings are taxed at 78%.

Most notably, it’s just completed a $3.2bn deal to buy the LLOG Exploration Company. This will see it operate from the US deepwater Gulf for the first time. It will also add significantly to reserves.

FCF’s expected to be $600m in 2026, rising to $1bn by 2028, as a result of recent deals.

3. Healthy prices

Harbour Energy’s forecasts are based on an assumption of $65 for Brent crude and $11 per thousand standard cubic feet for European gas. Currently (6 March), prices are comfortably above these levels. But they can be volatile so it’s unwise to base an investment decision entirely on present market conditions. Having said that, it would be silly to ignore them altogether.

Harbour Energy’s dividend cut is unfortunate. But with its expansion plans and debt reduction programme, I’m confident it will soon be in a position to increase its dividend once more.

Get its house in order and the group could be returning 75% of $1bn – 2.5 times more than is planned for 2026 – to shareholders by 2028. And even if I’m wrong, I reckon we could see some share price growth as investors recognise the group’s future potential.

The post This FTSE 250 stock’s just cut its dividend. But here are 3 reasons why I’m not selling my shares… appeared first on The Motley Fool UK.

However, that doesn’t mean every high-yielder should be disregarded. A few sufficiently sustainable high-yielders can give an average return that little boost it needs.

Harbour Energy

With a dividend yield of 8.83%, Harbour Energy (LSE:HBR) immediately stands out for consideration for anyone seeking chunky passive income. With three consecutive years of dividend growth and cash coverage running at around 10 times the payout, the distributions are well supported by underlying cash generation.

A forward price-to-earnings (P/E) ratio of 7.8 also suggests the shares may be undervalued relative to expected earnings, providing a margin of safety and potential for growth alongside the income stream. For passive income investors, that mix of high yield/dividend growth and apparently cheap valuation is attractive.

However, earnings have slumped by over 300% year on year. While not entirely unusual for cyclical energy stocks, it’s still concerning. If cash is needed to fund operations or service debt, dividends could be cut.

Speedy Hire

Speedy Hire offers a dividend yield just under 8%, making it another potential candidate for investors prioritising income. The company has an impressive 36-year record of uninterrupted dividend payments, which indicates a strong cultural and strategic commitment to rewarding shareholders.

Dividends are currently covered 6.6 times by cash flow, suggesting plenty of room for the growth even in tougher trading conditions. That level of cash coverage helps offset concerns around present unprofitability and a negative return on equity (ROE) of about -7%. High debt also threatens the dividend if earnings deteriorate further.

Still, the combination of long-term payment consistency and strong cash backing makes it worth considering for passive income investors comfortable with turnaround risk.

Ithaca Energy

Ithaca Energy (LSE:ITH) looks appealing on several fronts for income seekers, not least its eye-catching 12% dividend yield. Revenue’s grown an impressive 63% year on year, showing the business is still expanding at the top line despite sector volatility. The share price has also climbed 46.8% over the past year, which signals improving market confidence and has already delivered solid total returns to existing shareholders.

In addition, the company sits on almost £2bn of equity. This gives it a sizeable capital base that can support ongoing operations and investment. Together, this makes it a potentially powerful passive income vehicle, with scope for high payouts and growth if momentum continues.

However, the company’s currently unprofitable. Management already cut the dividend by 47% last year as cash coverage tightened to around 2.5 times. If earnings don’t recover, further cuts are possible as the company prioritises balance sheet strength and reinvestment needs over shareholder distributions.

As a result, Ithaca may be one to think about for investors willing to accept elevated risk in exchange for a very high, but less certain, income stream.

The bottom line

For investors building a passive income portfolio for retirement, reliability’s key. I typically aim for yields in the 5%-7% range.

But being too conservative can lead to suboptimal returns in the long-run. Locking in and reinvesting meaty dividends when the opportunity arises can help supercharge portfolio growth through compounding.

The post Tempted by dividend yields above 8%? Here are three passive income powerhouses worth a look appeared first on The Motley Fool UK.

Moreover, the consensus among analysts is that exceptional earnings growth will support this high dividend yield. It may also drive major gains in the share price over time.

So, how much could I make from the shares over time?

How much earnings growth?

The consensus projection is that Harbour’s earnings will grow a stellar average of 77% a year to end-2028.

A risk here is any prolonged bearish trend in the global oil and gas markets. However, the firm’s September 2024 acquisition of energy giant Wintershall Dea looks transformative in this respect.

Harbour’s full‑year 2024 results, published on 6 March 2025, showed revenue soaring 68% year on year to $6.2bn (£4.6bn). Earnings before interest, taxes, depreciation, depletion, amortisation and exploration expenses (EBITDAX) surged 48% to $4bn.

This momentum carried into its H1 2025 update, with revenue rocketing 179% to $5.3bn, and EBITDAX climbing 219% to $3.9bn.

What sort of price rise?

Earnings growth is reflected in the discounted cash flow valuation method. This projects future cash flows and then discounts them back to today to identify where any share should trade.

Analysts’ DCF models vary — some more conservative than mine — depending on the assumptions used.

However, based on my DCF modelling — including an 8.5% discount rate — Harbour Energy shares look 37% undervalued at their current £2.26 price.

Consequently, their ‘fair value’ is around £3.59. And this matters for long-term investors, as share prices can converge towards fair value over time.

What about the dividend income?

In 2024, Harbour paid a dividend of 26 cents per share, fixed at a sterling equivalent of 20.2p. This gives a current dividend yield of 8.9%. Analysts expect the yield to remain around this level until at least 2028.

So, my £20,000 holding in the firm would generate £28,543 in dividends after 10 years and £265,968 after 30 years.

As a long-term investor, I regard 30 years as a standard investment cycle. It begins with first investments around 20 and ends in early retirement options around 50.

The dividend figures reflect an average 8.9% yield, although this could go down, up, or stay the same. They also assume dividends are reinvested to harness the power of ‘dividend compounding’.

By the end of the 30 years, the value of my Harbour Energy holding (including the original £20,000) would be £285,968.

And that would pay me a yearly income from dividends of £25,451! But of course, nobody can predict how such companies will be faring in 30 years’ time.

My investment view

I believe Harbour Energy offers a rare combination of high income, deep value, and powerful earnings momentum. It is the sort of stock I want when looking to build long-term wealth.

The dividend yield alone is attractive enough for me to hold it. But what really strengthens its investment case is the potential for a major valuation re-rating. And underpinning both is extremely strong forecast earnings growth.

With Harbour shares trading well below my estimate of fair value and the dividend yield expected to remain high, I will buy more soon. I also think they are well worth the attention of other investors.

The post My £20,000 in this superb 8.9%-yielding FTSE income share could make me £25,451 a year in dividends over time! appeared first on The Motley Fool UK.

One example is Harbour Energy (LSE:HBR), the oil and gas producer. Its stock is presently offering a return over twice that of an interest-earning bank account. But is it a no-brainer buy? Let’s see.

Out of favour

Despite its attractive dividend, I think it’s fair to say that Harbour Energy’s unloved by investors. Last week (22 January), it issued its Q4 2025 trading update. Although it announced an increase of $100m to $1.1bn in its 2025 free cash flow (FCF), the company’s share price fell 7%.

This has helped push the yield on its stock’s higher. But experienced investors know that the generous 9% return currently on offer could be a sign that the group’s dividend will be cut. Indeed, the company recently said that it plans to move to a “payout ratio approach… incorporating a base dividend and share buybacks” to align with its peers.

In other words, it’s likely to pay a dividend equal to a pre-announced percentage of FCF. We’ll know for sure in March, when the group announces its full-year results. Until then, shareholders can only speculate.

However, given that the group’s current dividend is costing $455m — and that it’s expecting lower FCF in 2026 of $600m — I wouldn’t be surprised if it gives shareholders less this year. But a closer look at other UK-listed independent producers shows that, when it comes to yields, Harbour Energy isn’t an outlier.

Nearest and dearest

Energean Oil & Gas has operations in the Mediterranean and the UK. For the past 14 quarters, it’s paid a dividend of $0.30 a share. And it plans to do this throughout 2026. At the moment, its stock’s yielding 9.6%. This fixed payout policy is the opposite of a ratio approach.

By contrast, Ithaca Energy’s dividend has been much more erratic since listing in November 2022. Based on amounts paid over the past 12 months, its yield is 12.9%. The group, which has stakes in six of the UK’s 10 largest fields, has a policy that targets annual dividends of 15%-30% of post-tax net cash from operating activities.  

As for Kosmos Energy, it doesn’t currently pay any dividends.

What does this tell us?

It’s clearly a mixed picture. But with earnings in the energy sector being notoriously volatile, future dividends are impossible to predict with any great accuracy.

However, even if Harbour Energy does cut its payout, I think it remains an attractive proposition. I like its strategy of expanding overseas to mitigate the impact of the UK government’s windfall tax. By doing this, it’s been able to reduce its operating costs. And despite energy prices being at relatively low levels, the group’s reduced its net debt by $300m during 2025.

Acknowledging that investing in the sector might not appeal to everyone, I think it’s a stock to consider, even though I suspect the 9% yield won’t be available for much longer. Even if it cuts its payout by 50% in 2026, it would still be yielding more than one of those bank accounts that I mentioned earlier. And what’s not to like about that?

The post With a 9% yield, is this FTSE 250 dividend stock a no-brainer buy for passive income? appeared first on The Motley Fool UK.

With both oil & gas shares taking a bit of a tumble over the last 12 months, it isn’t surprising to see the yield rise. And while such a large payout does signal risk of a payout cut in the future, there are always some rare exceptions.

So are these shares a classic dividend trap? Or could there be a lucrative passive income opportunity here?

Opportunities in fossil fuels

Harbour Energy and Energean are both independent oil & gas producers. Harbour’s the larger producer operating a geographically diversified portfolio across the UK North Sea, US Gulf Coast, Latin America, and North Africa, while Energean’s concentrated in the Mediterranean with the bulk of production near Israel and Egypt.

However, the way these companies generate revenue is a bit different. Harbour sells its oil & gas directly to global commodity markets, making it highly sensitive to fluctuations in global oil & gas prices.

By comparison, Energean relies primarily on long-term take-or-pay contracts. In oversimplified terms, these agreements ensure that customers buy a fixed volume at a fixed price that often rises with inflation. While that does mean Energean doesn’t benefit as much as Harbour Energy when oil prices rise, it also doesn’t suffer as much if prices fall.

Why are the yields so high?

The high-yield situation is different for both companies. Starting with Harbour Energy, the chief concern revolves around its 2024 acquisition of the Wintershall Dea project for $11.2bn. While this deal doubled its production capacity overnight, the company also became responsible for around $4.9bn of Wintershall Dea’s outstanding debts.

For the time being, current oil prices are enabling free cash flow generation to service its new obligations as well as maintain dividends. However, due to the group’s sensitivity to swings in the commodity markets, that could change very quickly if oil & gas prices drop.

In its May 2025 trading update, management revealed that a $5 drop in the price per barrel of Brent oil could wipe out $115m in free cash flow. And with fears of lower prices in 2026, the dividend could be vulnerable.

Due to its revenue model, Energean doesn’t share this weakness. However, with over half of its production located off the coast of Israel, investors are understandably concerned about potential geopolitical escalation. After all, the region isn’t exactly the most stable area of the world right now, which could lead to production disruptions.

What’s the verdict?

With both income shares facing substantial risks, it isn’t surprising to see the yield rise so high. This is a classic high-risk/high-reward scenario. However, out of the two companies, Energean seems to have an upper edge in terms of dividend sustainability in 2026.

Providing that production remains undisturbed, its lower sensitivity to commodity price swings offers far more cash flow transparency and resilience. That’s why I think it deserves a closer look from more aggressive income investors who are comfortable with volatility.

Having said that, I’m not rushing to buy the shares today. Instead, I’ve got my eye on other lucrative and lower-risk income opportunities for my portfolio.

The post 9.7% dividend yields! Should I buy these FTSE income shares? appeared first on The Motley Fool UK.

But such a high yield is rare. Could the stock be something of a value trap? Let’s take a look.

Up and down

In its relatively short stock exchange life – it only listed in April 2021 — Harbour Energy has steadily increased its dividend. However, at the same time, its share price has been falling. As an example, since January 2025, it’s down 28%, the outcome of which is a higher yield. But at least the price is up almost 6% over the past six months.

Inevitably, the group’s share price will ebb and flow in line with global energy prices, which can be volatile. However, the group faces another issue. Until recently, it was heavily reliant on the North Sea for its production. This is a problem because the UK government taxes the profit generated from the country’s waters at an incredibly high rate of 78%.

To try and mitigate the impact on its earnings, the group’s expanded its interests overseas.

What’s it doing?

In December 2023, it announced that it was acquiring the upstream assets of Wintershall Dea in an $11.2bn deal. It now means the majority of the group’s production comes from outside the UK’s continental shelf. And it’s significantly reduced its operating cost per barrel. But since releasing details of the deal, its share price has fallen by approximately a third.

Similarly, just before Christmas, it said it was buying LLOG Exploration Company (LLOG) for $3.2bn. On completion, this will give it access to the Gulf of Mexico for the first time. But since then, its share price has been largely unchanged.

As a Harbour Energy shareholder, I find this frustrating. But at least I can take comfort from its above-average dividend. However, as a seasoned investor, I know there can never be any guarantees when it comes to shareholder returns.

Indeed, in the press release accompanying news of the LLOG purchase, the group said its intention was to move its policy on distributions to a “payout ratio approach in 2026, incorporating a base dividend and share buybacks“.

What does this mean? I’m not exactly sure. It sounds as though the group will pay a fixed percentage of profit by way of dividends each year. Although the company says it expects its payout to be “competitive”, a cut could be coming.

Final thoughts

Even so, I remain hopeful that the group’s in a position to grow its earnings in the coming years. And that should be good news for its share price. The LLOG deal’s expected to be “free cash flow per share accretive” from 2027, which the group says will help reduce its debt.

Acknowledging that the company might not appeal to ethical investors, I think its shares are worth considering, even with the risk that a dividend reduction could be on the cards. For 2025, the group expects its free cash flow to be $1bn. This is impressive given a backdrop of relatively low energy prices and the UK windfall tax. Expanding overseas is likely to improve this further.

The post Down 28%, this FTSE 250 share offers a 9.5% dividend yield for investors appeared first on The Motley Fool UK.

Personally, I’m using an ISA and a SIPP (Self-Invested Personal Pension) to build up a nest egg for my retirement. But how much would be needed in a Stocks and Shares ISA to match average UK earnings? Let’s take a closer look.

Crunching the numbers

According to the Office for National Statistics, £766.60 is the target. This is the median weekly earnings (before tax) of the country’s full-time employees.

To generate the same level of income from an ISA full of dividend shares yielding 6%, an individual would need to have a portfolio worth £664,387.

This is a large sum. But with a disciplined approach over a lifetime of investing, I reckon it’s possible to achieve something similar. The table below shows how much can be generated over 30 years depending on the monthly contribution and return achieved.

However, one of the advantages of using a Stocks and Shares ISA, is that all income and capital growth can be enjoyed free of tax.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

So, is it possible to have a portfolio of shares paying dividends of 6%? I think so.

Close to home

One of the reasons why I like investing in UK shares is that many of them have impressive track records of returning cash to shareholders. Of course, there are no guarantees but a company’s history of payouts can be a useful guide.

For example, for 43 years, Scottish Mortgage Investment Trust has grown its dividend per share in cash terms. However, there’s another FTSE 100 company that’s done better. Halma’s 2025 financial year marked its 46th consecutive annual increase. What’s more, each of these has been worth 5% or more.

But neither of these stocks are yielding 6%. To achieve a return like this, it’s necessary to consider the top six on the index of the UK’s largest 100 companies. For comparison, the FTSE 250 currently (12 January) has 34 stocks offering a yield of 6%.

An option

One FTSE 250 dividend share that I think’s worth considering – indeed, one that I hold – is Harbour Energy (LSE:HBR). Since I first invested in 2022, the oil and gas producer has increased its dividend by around 13% but its share price has fallen by more than 40%. This means its current yield is 10.3%.

Not everyone likes the idea of investing in an energy company, which means there’s a smaller pool of investors out there. And Harbour Energy’s subject to a windfall tax of 78% on its UK profit.

However, as a result of some strategic acquisitions, it now produces more outside of the UK’s waters than it did previously at a lower unit cost. And despite the tax rate it faces here, the company’s expected to have generated $1bn of free cash flow in 2025, of which it plans to pay $455m to shareholders. Also, it has 19 years of reserves.

Harbour Energy’s just one exciting UK share that I hold.

The post How much do you need in a Stocks and Shares ISA to aim for £766.60 of weekly passive income? appeared first on The Motley Fool UK.

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.

The post I’m targeting £42,949 in dividend income for my retirement from £20,000 in this 10.2%-yielding FTSE 250 gem! appeared first on The Motley Fool UK.