Do Woodside shares really have a 6% dividend yield right now?

Is the petroleum company's dividend yield too good to be true?

| More on:
A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.

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

Key points

  • Woodside Energy shares have had a dramatic 12 months
  • This oil share has vastly outperformed the ASX 200 over the past year
  • We check whether Woodside shares are really offering a 6% dividend yield 

Few ASX 200 shares have had as dramatic a year as the Woodside Energy Group Ltd (ASX: WDS) share price. For one, over the past 12 months, Woodside shares have gained an impressive 40.25%. That certainly looks good against the 8.3% loss that the S&P/ASX 200 Index (ASX: XJO) recorded over the same period.

But then there's also the blockbuster merger with BHP Group Ltd (ASX: BHP)'s petroleum division to consider as well. Back in May, the old Woodside Petroleum Ltd became Woodside Energy after BHP spun out its petroleum division. All BHP shareholders at the time received one new Woodside Energy share for every 5.534 BHP shares owned.

As we covered at the time, this tie-up saw Woodside become a "top 10 global energy producer with over two billion barrels of proven and probable reserves and annual EBITDA approaching US$5 billion".

So as it stands today, the 'new' Woodside has a market capitalisation of $59.8 billion. But is Woodside's trailing dividend yield of 5.94% too good to be true?

Well, this trailing yield comes from the last two dividend payments this oil share has doled out. These were the $1.46 per share final dividend investors received in March as well as the interim dividend of 41 cents that was paid out last September.

Both of these payments were fully franked, which means that the trailing yield of 5.94% grosses up to an even more impressive 8.49% with the value of that franking.

But that represents the past. So what of the future?

Are Woodside shares' dividend yield of 6% a floor or a ceiling?

Well, any company's trailing dividend yield comes from its past dividend payments. So no investor should automatically assume Woodside shares will continue to pay a near-6% yield.

Saying that, many ASX experts are indeed predicting Woodside will be able to keep doling out large dividend payments going forward.

One is broker Ord Minnet. As my Fool colleague Tristan covered last month, this broker reckons Woodside's next interim divided will bring its dividend yield up to 13.6% for FY2022. However, Ord Minnet is also predicting the dividends Woodside will pay that cover FY2023 will be lower, and will equate to a forward yield of 8.1%.

Even so, if Ord Minnet is to be believed, it looks as though Woodside's trailing dividend yield of almost 6% might be a floor, rather than a ceiling, over the next 12 months. But we shall have to wait and see what happens.

Should you invest $1,000 in Appen Limited right now?

Before you buy Appen Limited 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 Appen Limited 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 30 April 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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Share Gainers

Boss Energy shares have rocketed 90% in a month. Here's why

The massive rally in Boss Energy shares will be painful to the host of short sellers betting against the uranium…

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

ASX 200 energy shares plunge on shock OPEC move

ASX 200 energy shares like Woodside and Santos are tumbling on Monday. Let’s find out why.

Read more »

Female oil worker in front of a pumpjack.
Energy Shares

Should you buy Woodside shares in May?

Is this energy giant a good investment right now?

Read more »

Hand holding out coal in front of a coal mine.
Energy Shares

Down 20% this year, are Whitehaven Coal shares a buy, hold or sell according to Macquarie?

Here’s what’s in store for this Australian independent coal producer.

Read more »

Rocket powering up and symbolising a rising share price.
Energy Shares

Guess which ASX uranium stock could rocket 45%

Big returns could be on offer from this stock. Let's see what Bell Potter is saying.

Read more »

A miner stands in front of an excavator at a mine site.
Energy Shares

3 ASX 200 uranium shares soaring 10%-plus today

What has got investors excited today?

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Woodside shares higher on 'game-changer' news

Let's see what the energy giant has announced on Tuesday.

Read more »

A Paladin Energy miner wearing a hard hat and protective gear stands in front of a large mining truck and smiles to the camera.
Energy Shares

Paladin Energy shares have surged 32% in 2 days. Macquarie says that's the tip of the iceberg

After a tough year, the future is looking brighter for Paladin Energy shares.

Read more »