With its 9% dividend yield, Ithaca Energy‘s (LSE:ITH) quickly become one of the most talked-about shares on the London market. For anyone building a second income, that’s an eye-catching percentage.

The North Sea oil and gas producer joined the FTSE 100 in September following the most recent reshuffle.

But I’m hesitant to rush in on yield alone. I’m not saying I think the shares will fall, it’s more a question about whether the income’s sustainable.

Why the yield is so high

There’s a strong story here. In 2026, Ithaca reported record Q2 production of 131,000 barrels of oil equivalent per day (boepd), while H1 output averaged 128,000 boepd. Full-year guidance remains 120,000-130,000 boepd.

The company also raised its 2026 dividend guidance to $500m-$530m, from $470m-$520m, and extended a $1.8bn financing facility to 2032. Those are serious upgrades.

But the payout isn’t guaranteed in the way a utility dividend can be. Ithaca’s policy is to return 30% of post-tax operating cash flow to shareholders. That links the dividend directly to oil and gas prices, operating costs and financing charges.

Compare that with National Grid, whose income is largely from regulated networks – not a payout that could change with Brent crude. I don’t want a second income I have to keep checking against the oil price.

The Canada deal changes the story

Ithaca’s agreed to buy Suncor Energy’s interests in the Terra Nova and White Rose oil assets off Canada’s east coast. The upfront cash consideration is $860m, with up to $250m more payable depending on oil prices.

The acquisition adds an estimated 103m boepd of 2P (probable) reserves. Ithaca expects the assets to contribute average production of about 30,000 boepd between 2027 and 2031, rising to 35,000-40,000 in 2029.

That could lift Ithaca’s medium-term production outlook to 140,000-150,000 boepd. The company also expects the deal to be accretive to adjusted EBITDAX, free cash flow and dividend per share from completion.

But completion isn’t expected until the first half of 2027, subject to Canadian regulatory and government approvals. Until then, the extra cash flow is a forecast, not a fact. Acquisitions can add value, yet they can also bring integration costs, project delays and unexpected capital spending.

What I’d want to see

I think Ithaca Energy’s worth a closer look, as it’s become a genuinely interesting high-yield opportunity. But before jumping in I’d monitor the following:

• Completion of the Canada deal without delays or cost overruns.
• Production and cash flow meeting management’s expectations.
• Dividend guidance being delivered, with the payout comfortably covered by free cash flow.
• A clear picture of net debt and financing costs after the acquisition.

When it comes to earning a second income from dividends, reliability matters more than just a high yield. Investors with a high risk appetite may consider it before Canada has proven itself, but I’m going to err on the side of caution until there’s more clarity.

A bit of patience doesn’t mean avoidance – simply taking a smart and measured approach before making a decision. And there’s another dividend stock that I’m even more attracted to right now…

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Mark Hartley owns shares in National Grid.