Woodside vs Westpac: Which ASX share is better for passive income?

Woodside Energy vs Westpac

When it comes to building a reliable passive income stream, many ASX investors find themselves comparing household names like Woodside Energy and Westpac. Both are titans in their respective fields—energy and banking. But when deciding between Woodside shares and Westpac shares for passive income, the differences in dividend profiles, business models, and recent momentum can really shape the call. Let’s take a closer look at how these two stocks stack up.

The case for Woodside

Woodside is Australia’s largest independent oil and gas company, producing and marketing energy both here and offshore. With a history stretching back to 1954 and a significant boost from its recent merger with BHP’s petroleum assets, Woodside has evolved into a global energy player. According to its most recent public description, Woodside operates a diverse portfolio of offshore platforms and floating production vessels, and its shares have established themselves among the biggest names on the ASX.

For income-focused investors, Woodside’s fundamentals stand out in a few ways:

• Dividend yield: 5.24%, fully franked, which remains attractive compared to many blue chips.
• P/E ratio: 13.81, offering moderate earnings multiples for the sector.
• Recent returns: Its year-to-date return is sitting at a robust 38.9%, pointing to strong recent share price momentum.

Woodside’s dividend history also confirms consistent and fully franked payouts, and its most recent annual dividend is $1.63 per share.

The case for Westpac

Founded in 1817, Westpac is one of Australia’s four biggest banks and a major fixture on the ASX. It operates across multiple banking and wealth management lines, from retail and business banking to specialist financial services, both locally and across the Tasman. Through brands like St.George and Bank of Melbourne, Westpac has become a cornerstone for many Aussies’ day-to-day finances.

On the passive income front, Westpac offers:

• Dividend yield: 4.43%, fully franked—solid, though a step below Woodside’s headline rate.
• P/E ratio: 17.13, which is somewhat higher (i.e. more expensive earnings multiple) than Woodside, though this is not unusual for a major bank.
• Earnings per share: $2.029, comfortably supporting the current $1.54 annual dividend.

Westpac has also maintained a long and stable record of paying dividends—every single one fully franked in the last two decades—and remains a stalwart income stock for retired and dividend-focused investors.

Valuation comparison

Here’s how the key numbers stack up right now:

Recent share price performance

Comparing recent share price history up to 24 September 2026:

• Woodside Energy: Closed at $31.61, up 1.54% on the day. The share price is up 38.9% year to date—a very strong run.
• Westpac: Closed at $34.13, down 1.81% on the day. Year to date, Westpac shares are actually down 8.0%, showing some negative momentum recently.

Which is the better buy?

If I’m looking for a passive income pick today, I’d lean toward Woodside. Here’s why: Right now, Woodside offers a higher fully franked dividend yield than Westpac, with dividends underpinned by healthy earnings (as suggested by the EPS and payout ratio). The oil and gas operator is also showing strong recent price momentum, up almost 39% this year, while pockets of the banking sector—including Westpac—are lagging, with Westpac shares down about 8% over the same stretch.

Westpac still offers a reliable, fully franked dividend and is a classic income play. But with Woodside’s higher income yield and noticeably better recent share performance, my pick for new passive income dollars would be Woodside Energy. Of course, no dividend stock is risk-free—energy profits can be cyclical, and banks have their own headwinds. Still, based on the latest data, the edge goes to Woodside for now.

The post Woodside vs Westpac: Which ASX share is better for passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.