How are these passive income investors still earning a 14% dividend yield on Woodside shares?

Woodside Energy Group Ltd (ASX: WDS) shares closed on Friday trading for $30.84 apiece.

That sees shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock up 2.5% since last Monday’s close.

I flag Monday, because Woodside reported its full-year 2023 results on Tuesday.

With oil and gas prices down significantly from 2022, the company saw operating revenue for the 12 months fall by 17% to US$13.99 billion. And underlying net profit after tax (NPAT) declined by 37% to US$3.32 billion.

Still, with a strong outlook for energy markets and a solid balance sheet, investors reacted by sending Woodside shares up 0.9% on the day.

The stock may have gotten an extra boost from passive income investors. Although down 58% from the all-time high 2022 final dividend, management still declared an attractive, fully franked final dividend of 60 US cents per share. Or about 92 Aussie cents per share at current exchange rates.

That brings the past 12 months’ total dividend payout to a rounded $2.16 per share. Meaning investors buying on Friday will be earning a trailing yield of 7.0%.

Which begs the question, how are these passive income investors still earning a 13.5% yield on Woodside shares?

Buying Woodside shares when there’s ‘blood in the streets’

As British banker and investor Baron Rothschild famously remarked, the time to buy shares is “when there is blood in the streets”.

Now, trying to get into stocks near their lows is notoriously tricky. And buying them at the lows is even trickier.

But there have been times over recent years when quality ASX 200 stocks, like Woodside shares, have been smashed for reasons that have little or nothing to do with their longer-term earnings outlook.

One such time when there was hypothetical blood in the streets for almost every listed company, was during the early months of the COVID-19 pandemic.

As investors rushed to sell everything but the kitchen sink, Woodside shares tumbled to a low of $16.00 on 20 March 2020 before beginning a gradual recovery.

That means brave passive income investors who ignored the panicking herd and bought Woodside stock on the day will now be earning a yield of 13.5% on those shares.

And they’ll have enjoyed a 92.7% share price gain since then to boot.

The post How are these passive income investors still earning a 14% dividend yield on Woodside shares? appeared first on The Motley Fool Australia.

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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.

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