Is the Woodside share price a buy right now?

The ASX energy share Woodside Energy Group Ltd (ASX: WDS) has seen significant volatility over the past few years, as the chart below shows. After everything that has happened, it’s a good time to ask whether it’s the right time to invest.

The business is not one of the greenest companies on the ASX, but it plays an important role as part of the global energy mix in the coming years.

It produces both oil and gas, which can help the company generate pleasing levels of cash flow in the coming years and pay for sizeable dividends.

Firstly, let’s take a look at what Woodside is expecting from its energy portfolio of commodities for the foreseeable future.

Outlook for the energy it produces

Woodside stated that oil is expected to continue playing a significant role in the global energy mix.

The ASX-listed energy company believes that gas demand is expected to grow in the coming years, with liquefied natural gas (LNG) playing an increasingly significant role in the global energy mix, supporting energy security while helping customers achieve lower overall emissions.

LNG demand is forecast to grow by around 60% by 2035, with potential supply delays likely to tighten the balance between demand and supply. Woodside believes LNG can displace higher-emission coal in regions such as Asia.

Woodside also believes that there’s a growing role for ammonia across a wide variety of use cases, with broad regulatory support from European and Asia Pacific countries.

The company is seeing developed nations continue to see trends of increased power demand from uses such as AI and data centres.

Woodside also said that rapid non-OECD growth presents an opportunity to supply reliable, lower-carbon energy. Those countries are experiencing continued growth in population, which helps boost potential future demand.

Do owners of Woodside shares get good dividends?

The company has a dividend policy to maintain a dividend payout ratio of at least 50%.

Excluding non-recurring items, the company aims to pay out between 50% and 80% of its net profit after tax (NPAT).

Woodside is also open to providing investors with special dividends and share buybacks if it has excess cash on hand. The business is also targeting a gearing (debt) ratio of between 10% and 20% through the cycle.

UBS is projecting that the business could pay an annual dividend per share of US 52 cents in FY26 and US 79 cents in FY27. If it does pay that amount in FY27, that’d be a grossed-up dividend yield of 7%, including franking credits, in the 2027 financial year.

Is the Woodside share price a buy?

According to CMC Markets, the business has received nine ratings, comprising three buy ratings and six hold ratings, with an average price target of $26.52. That implies a possible rise of more than 5% from where it is today, so it could still generate positive returns for investors, but it doesn’t seem like the best time to invest.

Other ASX shares may be capable of stronger returns, in my view.

The post Is the Woodside share price a buy right now? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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.