Looking at Woodside Energy Group Ltd (ASX: WDS) shares today, it's likely that one thing will catch most investors' attention right away. That would be the ASX 200 oil share's monstrous dividend yield.
Right now, the Woodside share price appears to have a whopping trailing dividend yield of 10.84% on the table.
That yield is more than twice what dividend favourite Commonwealth Bank of Australia (ASX: CBA) is offering right now. It is also above all four of the ASX big banks. As well as nearly four times the yield offered by Woolworths Group Ltd (ASX: WOW) as it stands today.
This 10.84% trailing yield comes from the final dividend of $2.15 per share that Woodside investors received back in April, as well as the $1.60 per share interim dividend the company dished out last October.
It's worth pointing out that these dividend payments were uncharacteristically large compared to what Woodside has traditionally paid out to its shareholders.
Sure, in 2022, the oil giant forked out an annual total of $3.06 in dividends per share to investors. But in the preceding year, investors only enjoyed a minuscule (by comparison) 56.3 cents per share. 2020 before that had $1.19 per share in total, while 2019 saw $1.80.
Now to examine the question we're all here for: Is this near-11% yield really on the table for new investors today?
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Is Woodside an 11%-yielding dividend share today?
Well, that's a harder question to answer than might first appear. A company's trailing dividend yield is just that — trailing. It reflects the dividends a company has paid out in the past, not what it will pay out in the future.
No ASX share is under an obligation to maintain its dividend levels from year to year. There is nothing stopping Woodside from halving its next two dividends compared to the previous two. Or stopping them altogether.
If that latter scenario plays out (which, for the record, is arguably highly unlikely), Woodside shares would have a trailing dividend yield of 10.84% but a forward yield of 0%.
But let's move back into the realm of what is likely, not what is possible. So the primary driver behind Woodside's ability to fund dividends is the price it can command for its oil and gas.
When Woodside declared its most recent dividend at the start of this year, WTI crude oil was going for around US$80 per barrel after touching US$90 per barrel a few months prior. Today, that same barrel would fetch just under US$70.
If WTI stays at these sorts of levels, it would be unlikely that Woodside was able to pay out the same level of dividends as we've seen most recently. Remember, a fall from 80 to 70 translates into a 12.5% decline. From 90 to 70, it's 22.2%.
So I would expect Woodside shares to pay out a smaller, but still substantial, two dividends over the next 12 months. As such, I wouldn't describe Woodside as an 11% yielder right now. But I still think it will handily outperform CBA in terms of income over the next year or two at least.
