Today is a good day to have Woolworths Group Ltd (ASX: WOW) shares in your investment portfolio.
While its share price may have been caught up in the market weakness today, there's still reason to smile.
That's because today is payday for its shareholders.
Payday for Woolies shareholders
As a reminder, in February, Woolworths released its half-year results.
For the six months ended 31 December, the supermarket giant reported a 4.4% increase in revenue to $34.64 billion and a 2.5% increase in profit before significant items to $929 million. This was driven by strong growth from its Australian Food business, which helped offset a poor performance from the Big W and New Zealand businesses.
This allowed the Woolworths board to increase its fully franked interim dividend by 2.2% to 47 cents per share.
Woolworths' shares went ex-dividend for this payout at the end of February. So, if you owned its shares when that happened, today is payday for you.
What's next for the Woolworths dividend?
According to a note out of Goldman Sachs, its analysts expect another increase to the Woolworths dividend in August.
The broker is forecasting a fully franked final dividend of 62 cents per share, bringing its full-year dividend to $1.09 per share. This represents a 4.8% increase year on year.
But its growth won't stop there according to the broker. It is forecasting a 7.3% increase to $1.17 per share in FY 2025 and then a further 8.5% increase to $1.27 per share in FY 2026.
Are Woolworths shares good value?
Goldman Sachs thinks that the supermarket giant's shares are undervalued at current levels.
The broker has a buy rating and $40.40 price target on them, which implies a potential upside of approximately 25% for investors over the next 12 months. It commented:
WOW is the largest supermarket chain in Australia with an additional presence in NZ, as well as selling general merchandise retail via Big W. We are Buy rated on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as its ability to pass through any cost inflation to protect its margins, beyond market expectations. The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock.
