Ithaca Energy (LSE: ITH), the North Sea independent oil and gas producer, has become the FTSE 100’s highest-yielding stock following its promotion from the FTSE 250.
The change at the top occurred on 21 September, ending Legal & General’s (LSE: LGEN) reign as the index’s leading passive income stock.
Ithaca’s ascent to the FTSE 100 has been rapid, having only listed in November 2022, driven by a series of acquisitions and soaring energy prices.
The company has signalled further expansion is on the cards, announcing a “transformational” deal to acquire offshore oil assets in Canada for $860m plus up to $250m of performance-related deferred consideration.
Management described the transaction as “immediately cash flow and dividend accretive,” offering some reassurance to income-focused investors watching the stock closely.
The deal announcement took a pointed tone regarding UK energy policy, noting Canada’s “pragmatic federal and provincial government, providing strong support for further investment and development in the basin.”
The contrast with the UK is stark, as North Sea energy profits are taxed at 78%, and development of key fields including Rosebank, in which Ithaca holds a 20% interest, and the Jackdaw gas field remains uncertain.
Ithaca’s dividend history has been volatile since listing, with payouts of 39.60 cents in 2023, 34.04 cents in 2024, and 30.23 cents in 2025, reflecting the erratic nature of energy prices.
For 2026, the group is targeting a dividend of $470m to $520m, implying a forward yield of 7.8% to 8.7% based on 10 October exchange rates.
Executive chairman Yaniv Friedman welcomed the index promotion, stating: “We’re very pleased to be entering the FTSE 100, reflecting ongoing efforts of optimisation, growth and delivery of shareholder value. We welcome the opportunities our updated position unlocks, including being introduced to a new pool of potential investors.”
Legal & General, by contrast, is one of Britain’s most established financial institutions, having been founded in 1836, and last cut its dividend during the 2008-2009 global financial crisis.
The pensions and savings group has pledged a 2% dividend increase on its 2025 payout, giving it a forward yield of 7.6% for 2026, just below Ithaca’s upper range.
Legal & General does face headwinds, including intensifying competition and a balance sheet carrying over £560bn of equities and bonds as of 30 June, which could be exposed during a sustained economic downturn.
On the growth side, Legal & General continues to win new pension schemes to manage, and its wealth management division is performing strongly, with group core operating earnings per share rising 11% in the first half of 2026 versus the same period in 2025.
Ithaca demonstrated considerable financial firepower of its own in the first half of 2026, generating $955m in cash from operating activities, more than twice its lower annual dividend target of $470m.
For income investors weighing the two options, Legal & General’s longer track record and institutional scale may offer greater dividend reliability, while Ithaca could deliver stronger cash flows when energy market conditions align in its favour.