Do Woodside shares really have a 6% dividend yield right now?

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.

Few ASX 200 shares have had as dramatic a year as the Woodside Energy Group Ltd (ASX: WDS) share price. For one, over the past 12 months, Woodside shares have gained an impressive 40.25%. That certainly looks good against the 8.3% loss that the S&P/ASX 200 Index (ASX: XJO) recorded over the same period.

But then there’s also the blockbuster merger with BHP Group Ltd (ASX: BHP)’s petroleum division to consider as well. Back in May, the old Woodside Petroleum Ltd became Woodside Energy after BHP spun out its petroleum division. All BHP shareholders at the time received one new Woodside Energy share for every 5.534 BHP shares owned.

As we covered at the time, this tie-up saw Woodside become a “top 10 global energy producer with over two billion barrels of proven and probable reserves and annual EBITDA approaching US$5 billion”.

So as it stands today, the ‘new’ Woodside has a market capitalisation of $59.8 billion. But is Woodside’s trailing dividend yield of 5.94% too good to be true?

Well, this trailing yield comes from the last two dividend payments this oil share has doled out. These were the $1.46 per share final dividend investors received in March as well as the interim dividend of 41 cents that was paid out last September.

Both of these payments were fully franked, which means that the trailing yield of 5.94% grosses up to an even more impressive 8.49% with the value of that franking.

But that represents the past. So what of the future?

Are Woodside shares’ dividend yield of 6% a floor or a ceiling?

Well, any company’s trailing dividend yield comes from its past dividend payments. So no investor should automatically assume Woodside shares will continue to pay a near-6% yield.

Saying that, many ASX experts are indeed predicting Woodside will be able to keep doling out large dividend payments going forward.

One is broker Ord Minnet. As my Fool colleague Tristan covered last month, this broker reckons Woodside’s next interim divided will bring its dividend yield up to 13.6% for FY2022. However, Ord Minnet is also predicting the dividends Woodside will pay that cover FY2023 will be lower, and will equate to a forward yield of 8.1%.

Even so, if Ord Minnet is to be believed, it looks as though Woodside’s trailing dividend yield of almost 6% might be a floor, rather than a ceiling, over the next 12 months. But we shall have to wait and see what happens.

The post Do Woodside shares really have a 6% dividend yield right now? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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.

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