How does the Woolworths (ASX:WOW) dividend compare to its sector?

How much is Woolworths' dividend worth today?

| More on:
Two couples race each other in supermarket trollies, having a great time, smiling and laughing.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As a major S&P/ASX 200 Index (ASX: XJO) blue chip share, Woolworths Group Ltd (ASX: WOW) shares have long held a reputation for being an ASX 200 heavyweight when it comes to dividends. But how does this reputation hold up today?

At the time of writing, the Woolworths share price has lost 0.69% this Monday and is going for $41.70 a share. That's still pretty close to the company's all-time high of ~$42 that we saw last week. That figure takes into account the recent demerger of Endeavor Group Ltd (ASX: EDV) of course.

So at this current share price, Woolworths offers a headline dividend yield of 2.43%.

Where does this come from? Well, Woolworths' past 2 dividends. The grocery giant paid out an interim dividend of 53 cents per share in March of this year. Before that, its previous dividend payment was the final dividend of 48 cents per share that the company paid out in September last year.

Putting those two payments against the current Woolworths share price, and we get a yield of 2.43%. That yield grosses-up to 3.47% if we include the value of Woolworths' full franking credits.

So how dies this yield compare to Woolies' peers?

Well, let's take a look.

WOW, look at that dividend!

So Woolworths' most obvious peers are its rivals in the grocery space – Coles Group Ltd (ASX: COL) and Metcash Ltd (ASX: MTS). Coles competes with Woolworths with its own chain of grocery supermarkets, while Metcash is another competitor with its network of IGA-branded stores across the country.

So at the current pricing, Coles currently offers a dividend yield of 3.24%., or 4.63% grossed-up with full franking.

That comes from Coles' two most recent dividends: an interim payout of 33 cents per share in March 2021, and a final dividend of 28 cents per share that shareholders will see hit their bank accounts in September.

In Metcash's case, this company offers a current yield of 4.22% on current pricing, or 6.03% grossed-up. That comes from Metcash's past two dividends of 8 cents and 9.5 cents per share respectively.

Why is the Woolworths dividend so low?

So you might notice that the Woolworths dividend seems to be a lot lower than its peers in its sector. 2.43% against 3.24% or 4.22%. So what's going on here?

Well, in these three companies' case, it seems to be related to the earnings multiple investors are currently willing to pay. Take the price-to-earnings (P/E) ratio of Woolworths. It's currently sitting at 37.12. Compare that to Coles' current P/E ratio of 25.01 or Metcash's 17.77.

This tells us that investors are currently willing to pay a higher share price relative to earnings for Woolworths than Coles or Metcash. That means that investors are also willing to accept a lower dividend yield for Woolworths shares as a result.

Should you invest $1,000 in Vaneck Vectors Australian Equal Weight Etf right now?

Before you buy Vaneck Vectors Australian Equal Weight Etf shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Vaneck Vectors Australian Equal Weight Etf wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Opinions

2 ASX dividend shares I'd buy after the stock market sell-off

Both of these income stocks offer appealing dividend yields.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

2 outstanding ASX dividend stocks down 30% I'd buy right now

Analysts think these income stocks are cheap buys after falling heavily.

Read more »

Person holding Australian dollar notes, symbolising dividends.
Dividend Investing

How I would build a $1,000 monthly passive income stream with ASX shares

It isn't as hard as you might think to build a sizeable passive income.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

3 undervalued ASX dividend stocks paying a remarkable 6%+

Analysts are expecting big payouts from these shares.

Read more »

An ASX investor in a business shirt and tie looks at his computer screen and scratches his head with one hand wondering if he should buy ASX shares yet
Dividend Investing

Where are my dividends? A small error costing shareholders big dollars

There’s millions of dollars in unclaimed funds floating around. Does some of it belong to you?

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Dividend Investing

1 marvellous ASX dividend stock down 33% to buy and hold immediately

Analysts think this stock could be a great pick for income investors.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Dividend Investing

Dividend reinvestment plans deliver big discounts on Wisetech, Bendigo Bank, and Woolworths shares

Wisetech, Bendigo Bank, and Woolworths have announced their dividend reinvestment plan share prices.

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

How to earn $50,000 of passive income from ASX shares

The share market can be used by investors to generate significant income. Here's how.

Read more »