The Woolworths Group Ltd (ASX: WOW) dividend has been supercharged on the back of strong earnings during the first half of FY23.

Woolworths shareholders will receive a fully franked dividend of 46 cents per share on 13 April.

That’s 17.9% higher than last year’s interim Woolworths dividend and ahead of analysts’ expectations, which were 43.9 cents per share.

Why has Woollies turbocharged its dividend?

In short, a big profit is the reason why Woolworths has raised its interim dividend this year.

As my Fool colleague James reported this morning, Woollies beat expectations on many financial metrics.

The supermarket chain raised prices due to inflation, while a reduction in COVID-19 costs allowed it to boost its net profit after tax (NPAT) by 14% to $907 million. Sales were also up 4% to $33,169 million.

Woolworths raised its food prices by an average of 7.7%, which is in line with the headline inflation figure in Australia of 7.8% per annum.

In 1H FY22, the company encountered direct COVID costs of $239 million. Obviously, that didn’t happen in 1H FY23, which made a massive difference to the bottom line. The cost of doing business margin dropped by 29 basis points as a result.

How does the Woolworths dividend compare to Coles?

Coles Group Ltd (ASX: COL) reported its results yesterday, including a fully franked interim dividend of 36 cents per share.

That is 9.1% higher than last year’s interim dividend and the largest single dividend Coles has ever paid out.

So, the Woolworths dividend, boosted by 18%, represents a better increase by comparison.

But let’s look at dividend yield, too.

The Woolworths share price is currently $37.01, up 0.8% for the day. That means the interim Woolworths dividend of 46 cents per share represents a yield of 1.24%.

By comparison, the Coles share price is currently $18.04, down 0.5% for the day. That means the interim Coles dividend of 36 cents per share provides a yield of 1.99%.

Over the past 12 months, the Woolworths share price has risen by 5.2% and the Coles share price has increased by 4.5%.

The post The Woolworths dividend has just been boosted by 18%. Here’s the lowdown appeared first on The Motley Fool Australia.

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More reading

• Woolworths share price higher on strong result and ‘better than expected’ second-half start
• Woolworths share price on watch amid first-half earnings beat
• Is Coles now one of the best ASX 200 dividend shares?
• 5 things to watch on the ASX 200 on Wednesday
• Everything you need to know about the boosted Coles dividend

Motley Fool contributor Bronwyn Allen 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 positions in and has recommended Coles Group. 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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