Woolworths Group Ltd (ASX: WOW) shares have long been popular with passive income investors for their reliable, fully franked dividend payouts.
Unlike many ASX dividend stocks, the S&P/ASX 200 Index (ASX: XJO) supermarket giant even paid two fully franked dividends in the pandemic-addled year of 2020.
Now, with Woolworths' earnings and profits having come under pressure in H1 FY 2025, covering the six months to 5 January, so too did its interim dividend.
Management declared an interim dividend of 39 cents a share, down 17% from last year's interim dividend. Eligible shareholders should have received the latest passive income payout on 23 April.
Still, if we add in the 97 cents per share final Woolworths dividend, paid on 30 September, then Woolies has delivered $1.36 a share in fully franked dividends over the full year.
With Woolworths shares closing yesterday trading for $30.89 apiece, this sees the stock trading on a fully franked trailing dividend yield of 4.4%.
So, is the ASX 200 stock one to buy today?
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Are Woolworths shares a buy?
The answer to that passive income question depends on who you ask.
Family Financial Solutions' Jabin Hallihan notes that Woolworths stock offers defensive characteristics during market volatility. But he's not ready to pull the trigger just yet (courtesy of The Bull).
"The supermarket giant retains a strong competitive position in the retail space," said Hallihan, who has a hold recommendation on Woolworths shares.
According to Hallihan:
The company benefits from a broad market presence and from delivering value to its loyal customers. Group sales of $35.9 billion in the first half of fiscal year 2025 were up 3.7% on the prior corresponding period.
As for that passive income, he said, "The stock was recently trading on a dividend yield above 4%."
And with much of the company's earnings stemming from consumer staples (items people need even during downturns), Hallihan added, "Operationally, the company continues to execute well. The stock is defensive and appeals in volatile times."
A bullish outlook
Goldman Sachs has a more bullish outlook for the ASX 200 supermarket.
On 3 April, the broker retained its buy rating on Woolworths shares with a price target of $36.10. That represents a potential upside of nearly 17% from Tuesday's closing price.
Explaining its valuation (in distinct financial speak), Goldman said:
Our 12m TP of A$36.1 is based 50/50 on a FY25E EV/EBIT-based SOTP and 10-yr DCF to reflect short-term management capabilities and longer-term strategic growth.
For our SOTP, we value AU Food at 17x, Aus B2B at 10x, NZ Food at 8x, and W Living at 8x. Our DCF valuation assumes 7.7% WACC, 2.5% TGR.
If you need to Google some of those acronyms, you're not alone!
