While the FTSE 250‘s mostly known for being home to younger, growth-focused companies, there are also some fairly impressive income stocks among its ranks. Of these stands out a little-known independent oil & gas enterprise offering a staggeringly-high 10.1% dividend yield!

Are investors looking at a rare opportunity to secure an enormous passive income stream while oil & gas prices surge? Or is this payout simply too good to be true?

A bond-like income opportunity?

Usually, when a dividend yield enters double-digit territory, it’s often due to cash flows falling far short of what’s needed to maintain shareholder payouts for the long run. But in the case of Energean (LSE:ENOG), that’s not what’s happening.

In fact, the firm’s cash flow is remarkably robust, backed by multiple long-term gas sale agreements. So much so that management has exceptional revenue visibility contracted for the next two decades. The result is a rare bond-like dividend profile, something that’s exceptionally rare for an oil & gas exploration & production company.

So if the business is both highly profitable and exceptionally cash generative, why’s the yield so high? What’s the catch?

A risky proposition

Energean’s risk doesn’t lie in its financials, but rather in its operations. The group has multiple projects scattered across the Mediterranean basin. However, its flagship production site sits 12km offshore from the Lebanon-Israel maritime border – a region that is an active conflict zone.

To add further uncertainty into the equation, it’s also practically next door to the US-Israel-Iran conflict.

The company already had to hit the pause button on production in June 2025 for roughly two weeks following the initial Israeli-US airstrikes. And just earlier this month, production was once again halted as war broke out in Iran.

If geopolitical tensions in the region continue to escalate, this temporary shutdown could turn into a protracted one. And it could have dire consequences on its cash flows, especially if Energean’s assets become targeted by Iran or its nearby proxies.

A risk worth taking?

If Energean’s operations can resume quickly, investors could indeed be looking at an exceptionally lucrative opportunity. Even more so, given that production volumes are on track to meaningfully rise over the medium term as more development-stage projects start extracting fossil fuels.

However, that’s a pretty big ‘if’. Production could remain offline for potentially months, depending on how the situation evolves. And that’s something Energean’s highly leveraged balance sheet may not be able to afford.

If conflicts de-escalate and peace returns to the region, this risk quickly disappears, making Energean look like a promising opportunity. But as things stand, the risk’s simply too high for my tastes.

Luckily, there are still plenty of other FTSE 250 dividend stocks offering attractive yields today at much lower risk levels.