I'd buy 353 shares of this cheap ASX 200 dividend stock for $100 in monthly passive income

There's nothing shoddy about this cheap ASX 200 dividend stock.

| More on:
Man holding Australian dollar notes, symbolising dividends.

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

There's a cheap S&P/ASX 200 Index (ASX: XJO) stock on my radar to tap for some market-beating passive income.

To be clear, when I say 'cheap' ASX 200 stock, I don't mean there's anything shoddy about the company itself. Or its outlook for ongoing, strong future dividend payments.

Instead, I mean that the company's share price has dropped 16.11% over the past six months, due to circumstances mostly outside of its control.

And I mean that it trades on a price-to-earnings (P/E) ratio of less than six times.

So, without further ado, the cheap ASX 200 stock in question is oil and gas company Woodside Energy Group Ltd (ASX: WDS).

What's been happening with Woodside shares?

Woodside shares have faced headwinds over the past six months, mostly from a big retrace in energy prices.

The Brent crude oil price, for example, is currently at US$84 per barrel. While that's up from the mid-December lows of US$73 per barrel, it's well down from the US$97 per barrel Brent crude oil was fetching at the end of September.

Still, I'm not overly concerned about the retrace in energy prices that have helped put Woodside on my cheap ASX 200 shares list. I'm pretty confident oil and gas prices will tick back up along with the global economic growth outlook once interest rates begin to come off the boil.

This should see Woodside continue to offer passive income investors an outsized yield.

And let's not forget that the energy giant's full-year 2023 production ramped up by 18.7% year on year to reach 187.2 million barrels of oil equivalent (MMboe).

With this mind, let's turn to that very handy $100 a month (or $1,200 a year) in passive income I'm after.

A cheap ASX 200 stock for regular passive income

Over the past 12 months, Woodside shares paid out a total of $3.40 in fully franked dividends. That included the all-time high final dividend of $2.154 per share.

Eligible shareholders will have seen that record passive income hit their bank accounts on 5 April. The interim dividend was paid on 28 September.

At yesterday's closing price of $31.87 a share, that sees this cheap ASX 200 stock trading at a juicy trailing yield of 10.66%.

Now Woodside's future dividend yields may be higher or lower, depending on a range of company-specific and macroeconomic factors.

But based on this trailing yield, and my expectations of a rebound in energy prices, I'd need to buy 353 shares of this cheap ASX 200 stock to earn a $100 monthly passive income.

And, of course, I'll be hoping the Woodside share price delivers some gains as well.

Motley Fool contributor Bernd Struben 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 Dividend Investing

guy helping girl invest in shares and dividends
Dividend Investing

2 ASX dividend shares to buy this month: experts

Here’s why these high-yield dividend stocks are appealing…

Read more »

A man in a suit looks serious while discussing business dealings with a couple as they sit around a computer at a desk in a bank home lending scenario.
Dividend Investing

Beat low interest rates with these top ASX dividend shares

Analysts think these shares could be top picks for income investors.

Read more »

Two funeral workers with a laptop surrounded by cofins.
Dividend Investing

1 ASX dividend stock down 25% I'd buy right now

I think this is a great buy for a few different reasons.

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Dividend Investing

2 of the best ASX dividend shares to buy in July

Bell Potter has named these shares as best buys this month.

Read more »

A woman wearing dark clothing and sporting a few tattoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.
Dividend Investing

1 practically perfect Australian stock down 45% to buy now for lifelong income!

Income investors might want to check out this beaten down stock.

Read more »

A man with a wry smile on his face is shown close up behind ascending piles of coins as he places another coin on top of the tallest stack representing rising dividends
Dividend Investing

Here are the 3 biggest dividend payers in my ASX stock portfolio today

These three stocks pour cash in to my portfolio...

Read more »

A senior investor wearing glasses sits at his desk and works on his ASX shares portfolio on his laptop.
Dividend Investing

Overinvested in Fortescue shares? I'd buy these ASX dividend shares

Fortescue may not be the best choice for dividend income.

Read more »

Close up of woman using calculator and laptop for calculating dividends.
Dividend Investing

Forget term deposits! I'd buy these two ASX 200 shares instead

I’d rather buy these stocks for income than hold a term deposit right now.

Read more »