Looking at Woodside Energy Group Ltd (ASX: WDS) shares today, one metric might catch your eye. That would be this ASX 200 energy stock‘s rather large dividend yield.
As it currently stands, this Friday (at the time of writing anyway), Woodside shares are going for $30.30 each, down a nasty 1.13% for the day so far.
At this share price, Woodside would appear to be trading on a trailing dividend yield of 5.45%.
That’s large by any standards. But when you consider that most other blue-chip ASX dividend shares don’t have nearly anything of that size to offer up to income investors, it is of particular note. To illustrate, the closest rival to Woodside’s yield from the big four ASX banks, traditionally some of the ASX’s most formidable dividend payers, is currently ANZ Group Holdings Ltd (ASX: ANZ). It’s offering up a yield of just over 4.7% right now.
Commonwealth Bank of Australia (ASX: CBA) isn’t even in the same league, with its 3%-ish yield. Other blue chips, including Telstra Group Ltd (ASX: TLS), Coles Group Ltd (ASX: COL), and Wesfarmers Ltd (ASX: WES), are in a similar boat.
So should income investors prioritise loading up on Woodside shares if they are seeking to maximise their dividend income in 2026?
Are Woodside shares a screaming buy for that 5% yield?
Well, there’s nothing wrong with Woodside’s 5% yield itself. It hails from the last two dividend payments that the company dished out to investors. The first was the interim dividend from August, worth 81.82 cents per share; the second was the 83.49 cents per share interim dividend from March. Both payments came with full franking credits attached, as is Woodside’s habit.
Together, that 12-month total of $1.65 per share in dividends gives Woodside shares that 5.45% yield at the current stock price.
However, this merely reflects what Woodside has already paid out, not what it will pay out to investors who buy shares today.
Unfortunately, there’s no way to predict even the most reliable dividend stock’s payouts before the company reveals what they will be. Woodside is particularly unreliable given the highly cyclical nature of energy companies’ earnings. The reality is that the single largest factor determining Woodside’s future dividends will be the global price of oil. That is going up and down like a yo-yo at the moment, depending on the latest developments out of the Middle East. If oil prices do stay elevated, it obviously bodes well for the Woodside dividend.
However, the opposite could also be true. Earlier this week, my Fool colleague Bronwyn reported on the views of an ASX expert. He argued this:
Given Middle East tensions are expected to ease over time, energy prices could soften and reduce earnings support.
The stock now appears fully valued. In response to share price gains, it makes sense to lock in profits and re-allocate the proceeds to opportunities with stronger growth outlooks.
At the end of the day, Woodside is a relatively unreliable income provider. It certainly has the potential to gush cash when factors outside its control work in its favour. I think it has a place as a part of a well-diversified income portfolio. But investors may want to think twice before putting all of their eggs in Woodside shares’ basket.
The post 5.4% dividend yield: Are Woodside shares a buy for income today? appeared first on The Motley Fool Australia.
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Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.