Woodside Energy Group Ltd (ASX: WDS) shares are known for paying a fairly high dividend yield. But how large is it going to be?
The business is the largest oil and gas ASX share with a market capitalisation of around $63 billion according to the ASX.
After the merger with the BHP Group Ltd (ASX: BHP) petroleum business, it's now paying very big dividends. But investors need to know what the dividend yield for an individual Woodside share could be.
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Projections
Woodside is currently benefiting from fairly high energy prices. If you remember, the Russian invasion of Ukraine sent energy prices jumping. Prices have reduced from the peak, but they are still at a high enough level for Woodside to be making a lot of money.
In the first quarter of 2023, it achieved a portfolio average realised price of $85 per barrel of oil equivalent. The ASX oil share also saw revenue of US$4.33 billion – this was down 16% from the fourth quarter of 2022 because of lower production and lower realised prices.
According to Commsec, the business could pay an annual dividend per share of $2.425 per share.
At the current Woodside share price, this would represent a grossed-up dividend yield of 10.2%.
So, it certainly seems that investors may see a very attractive dividend yield in 2023.
But, there's more to a company's passive income potential than just one calendar year. I think it's worthwhile considering what the following two financial years could show.
In 2024 it might pay an annual dividend per share of $2.307, which would be a grossed-up dividend yield of 9.7%.
In 2025, Woodside shares could pay an annual dividend per share of $1.98, which translates into a grossed-up dividend yield of 8.3%.
So, it seems that investors are going to get large dividend yields to 2025. But, this is dependent on energy prices. If prices go higher than expected, then the dividend yield could be even better. But, the dividends could be worse than expected if earnings aren't as good.
What's driving the Woodside share price higher?
There are a couple of things that have seemingly helped Woodside shares over the past two days – higher energy prices and that the proposed changes to the Petroleum Resource Rent Tax (PRRT) may now not affect Woodside as much as it could have.
Instead, the PRRT changes could be more painful to other LNG project operators.
With Woodside's future net profit being hurt less by the change, as well as higher energy prices, it seems there's quite a lot for investors to celebrate.
If Woodside earnings can continue to perform well, then this bodes well for future Woodside dividends.
