Looking for a high-yielding ASX dividend share to add to your portfolio?
Below, we'll look at three reasons to buy ASX dividend giant Woodside Energy Group Ltd (ASX: WDS) right now.
But first…
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A bit of background
The S&P/ASX 200 Index (ASX: XJO) oil and gas stock has been drawing the attention of passive income investors since it began supersizing its dividend payouts in 2022 amid soaring energy prices.
While the most recent dividend has come down a touch along with oil prices, it's still quite attractive. And, as we'll look at below, I believe Woodside's dividend yield at the current share price is sustainable, or could even increase in the year ahead.
Over the past 12 months, Woodside paid a fully franked $2.15 final dividend. And management declared an interim dividend of $1.25 per share. Eligible shareholders will see that passive income land in their bank account on 28 September.
That equates to a full-year payout of $3.40 per share.
Now, the Woodside share price slipped 1.5% yesterday and is down 0.7% in intraday trade on Friday.
At the time of writing, shares are swapping hands for $37.67 apiece.
At that price this ASX dividend giant trades on a trailing yield of 9%, fully franked.
Aside from the share price retrace, there are three other great reasons to consider buying the ASX 200 energy stock today.
Why this ASX dividend giant stands out
The first reason is the company's profitability and strong balance sheet.
On 22 August, Woodside reported a record half-year net profit after tax (NPAT) of US$1.74 billion, up 6% year on year.
And as at 30 June Woodside had liquidity of US$7.51 billion (AU$11.76 billion).
Commenting on the company's balance sheet and dividend payout, CEO Meg O'Neill said, "Our strong financial performance and our focus on disciplined capital management has enabled us to maintain our interim dividend payout ratio through the cycle."
Woodside's gearing stood at 8.2% at the end of the first half.
The second reason to consider snapping up this ASX dividend giant now is the company's lengthy track record of paying two fully franked dividends per year. That record stretches back a full decade.
And the third reason to consider buying Woodside shares right now is a sizeable potential increase in the oil price over the coming six to nine months.
On 27 June Brent crude oil was trading for US$72.26 per barrel. But following production cuts from OPEC+ combined with a surprisingly resilient US economy, Brent has steadily moved higher since then, currently trading for US$89.51 per barrel.
And this week Saudi Arabia announced it would extend its one million barrel per day production cuts at least through the end of the year. Russia also pledged to maintain its cuts.
The reduced output amid fairly resilient global demand could offer some heady tailwinds for this ASX dividend giant.
Indeed, National Australia Bank Ltd (ASX: NAB) forecasts Brent crude will trade for an average of US$95.10 per barrel in the March 2024 quarter and reach US$99.70 per barrel in the June 2024 quarter.
That would represent an 11.4% increase on the current oil price. This should help support the Woodside share price as well as the upcoming year's passive income payouts from this ASX dividend giant.
