A double-digit yield from dividend shares sounds almost too good to be true. And in most cases it is. But every once in a while, a rare exception emerges. And investors who can spot these opportunities can lock in some enormous passive income.
Right now, three energy stocks are offering yields above 10%:
- Renewables Infrastructure Group (LSE:TRIG) at 10.5%.
- Greencoat UK Wind (LSE:UKW) at 10.2%.
- Ithaca Energy (LSE:ITH) at 10.1%.
But are these real income opportunities, or warning signs dressed up as windfalls? Let’s take a closer look.
The renewables pair: opportunity or value trap?
Renewables Infrastructure and Greencoat UK Wind are both London-listed renewable energy investment trusts. The former holds a diversified portfolio of wind, solar, and battery storage assets across the UK and Europe, while the latter specialises exclusively in British wind power.
The income case for both is genuinely compelling on paper.
Both have reaffirmed their 2026 dividend targets, with both also generating sufficient excess cash flow to fund the generous payouts to shareholders. After all, demand for electricity is only rising. And with the British government limiting oil & gas operations in the North Sea, demand from renewable generators is steadily ramping up.
But if that’s the case, then why are the yields so high? The honest answer is that both trusts trade at persistent, uncomfortable discounts to their net asset values.
There are quite a few forces driving this, including higher interest rates dragging down asset values and ramping up the pressure from leverage. But at the same time, stealthy changes to renewable subsidies have sparked significant uncertainty within the renewable energy sector, making most investors pretty cautious.
Buying today is definitely the contrarian stance. And it could prove quite lucrative, but if investor fears prove justified, then both renewable trusts could indeed be yield traps.
Ithaca Energy: high yield, high stakes
Ithaca Energy’s one of the largest oil & gas producers on the UK Continental Shelf, with stakes in six of the 10 largest fields, including a substantial interest in the giant Rosebank development in the North Sea.
The first quarter of 2026 was operationally strong. Average production of 126,000 barrels of oil equivalent per day came in despite severe weather in January and February. Underlying earnings reached $571m and net debt fell to $1.1bn, with available liquidity rising to $1.6bn.
As such, dividends weren’t only confirmed, but upgraded with over $500m now expected to be paid out. So why aren’t more investors taking advantage?
As previously mentioned, current UK energy policy’s unkind to North Sea operators, with massive windfall taxes levied against operators. Ithaca’s no exception. And the situation’s only made worse by a steadily rising production cost per barrel.
For now, the impact’s been manageable thanks to higher oil & gas prices. But if that changes, profits and, in turn, dividends could end up getting squeezed.
The bottom line on all three
All three businesses have committed to maintaining their currently massive yields… for now. But as already discussed, these enormous payouts come with enormous uncertainty and risk.
That’s why, personally, these dividend shares are not at the top of my Buy list. Instead, I’m far more interested in another dividend payer with a similarly juicy yield at a much lower risk.
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Zaven Boyrazian owns shares in Greencoat UK Wind.
