Ithaca Energy PLC (LSE:ITH) is a top dividend stock and worthy of a ‘Buy’ rating following its recent cash-boosting acquisition of ENI’s UK assets, that’s the view of stockbroker Peel Hunt.
The deal created a substantial production company yielding over 100,000 barrels of oil per day and capable of self-funding all future work programmes, Peel Hunt analyst Werner Riding said.
With a target of 175p, the broker’s Buy rating sees more than 50% upside to the current share price of 113.6p.
Riding, in a note, said the current market valuation and balance sheet represent a “comfortable leverage position from which to grow.”
The analyst added: “With a commitment to return up to US$1bn in cash over 2024/25, Ithaca is one of the highest dividend payers.
“By combining Ithaca and Eni UK’s portfolios, the enlarged company should benefit from long-term production cash flows with material growth optionality from new developments.”
According to Peel Hunt forecasts, Ithaca is expected to generate some $211 million of free cash flow this year, $879 million in 2025 and $766 million the year after that.
“Assuming US$500 million in annual dividends are paid in both 2024/25, Ithaca also offers a pro-forma dividend yield of c.12%/20% in the same years.”