Despite FTSE250 enjoying a solid rally this year, not all of his voters were so lucky. Ithaca energy(LSE:ITH) is a perfect example of this, with shares down almost 30% year to date, pushing its dividend yield to just shy of 16%.

Typically, such high levels of withdrawals are a warning sign. However, last month management announced and paid another dividend, suggesting shareholder payouts will continue. And with a price-to-earnings ratio of just 6.2, this energy stock looks very economical.

Is this a trap too good to be true? Or are investors looking for a sporadic and great opportunity to make money? Let’s explore.

Digging into the details

As Ithaca’s businesses grow, it has a habit of slipping under the radar of most energy investors. After all, it is a diminutive company compared to such titans BP AND Shell. However, after the recent acquisition Eniof its oil and gas assets, Ithaca has become a major producer of fossil fuels in the North Sea. In fact, the company is currently on track to produce 150,000 barrels per day by the early 2030s.

In addition to increasing revenues and profits, the transformation transaction is also expected to bring numerous cost savings and improve the company’s creditworthiness. Needless to say, it’s all rather positive. This would explain why management has committed to paying a $500 million dividend in 2024 and 2025.

All of this suggests that today’s 16% dividend yield is here to stay. So why don’t investors take advantage of this seemingly obvious opportunity?

Risk versus reward

From a production point of view, the future of Ithaca looks promising. But it comes with a lot of corporate uncertainty. First, the company is currently subject to a huge windfall tax that hurts profitability. But more importantly, to complete the Eni deal, the board will likely need to issue many novel shares. In other words, equity dilution may be just around the corner.

Therefore, although a $500 million dividend may be paid, actual dividends per share and profitability may be significantly lower than current levels in the near future. It’s difficult to say exactly what the situation will be like. And it is this uncertainty that appears to be dragging FTSE 250 shares down.

Time to buy?

Buying when everyone else is selling can be a lucrative investing strategy. The same may apply to the purchase of Ithaca Energy stock in 2024. However, much depends on whether management can successfully achieve all its acquisition goals.

Many unforeseen complications can arise when handling a transaction of this size. Suppose the integration process is disrupted or Eni’s resources do not meet performance expectations. If this happens, management may inadvertently damage the balance sheet, causing the stock price to fall even lower.

Personally, I have no interest in adding this type of uncertainty to my portfolio right now. That’s why I’m highlighting other promising FTSE 250 stocks with a lower risk profile.