Woodside vs Ampol: Which ASX energy stock should you buy?

Woodside Energy Group vs Ampol shares: Which ASX energy stock looks better?

With energy prices a big topic for Aussie investors and global themes front of mind, both Woodside Energy Group Ltd (ASX: WDS) and Ampol Ltd (ASX: ALD) land in the spotlight. As two of the largest names in oil and gas, yet with different business models, many will be wondering which company’s shares are the better buy today. Here’s how they stack up across their core businesses, fundamentals, value, dividend payouts, and recent momentum.

The case for Woodside Energy Group

Woodside Energy Group is Australia’s largest dedicated oil and gas operator. Producing mainly LNG, oil, and gas from a range of large offshore assets, Woodside is seen as a heavyweight in the sector. After merging with BHP’s oil and gas business, Woodside further cemented its status as a truly global energy player. The company, founded in 1954 and listed on the ASX since 1971, holds big production scale and a broad asset base spanning Australia and international waters.

Looking at key fundamentals:

• Market Cap: $61.63 billion – one of the top 20 listed companies in Australia
• P/E Ratio: 14.32 – not far from the broader ASX average for a large energy producer
• Dividend Yield: 5.03% (fully franked, as per its most recent figures)
• Year To Date Return: 44.3% – a hefty share price run over the current calendar

Woodside has a long, consistent track record of large, fully franked dividends for shareholders stretching back decades, with its last payment at $0.57 per share (fully franked). The company’s scale and resources offer stability, even as it faces the long-term headwinds familiar in fossil fuels.

The case for Ampol

Ampol is better known to most Aussies as the brand behind roughly 2,000 service stations nation-wide. As Australia’s only listed refiner and one of the largest distributors of petroleum products, Ampol’s business is all about refining (primarily from its Lytton plant in Brisbane) and big-volume fuel retail and distribution. The company trades on history – it’s well over a century old, formerly operated as Caltex, and has more recently focused on retailing and logistics (while also maintaining a presence in New Zealand via Z Energy and a significant stake in Philippine fuel company Seaoil).

Ampol’s standout numbers:

• Market Cap: $10.28 billion – much smaller than Woodside, but still substantial
• P/E Ratio: 7.18 – sitting well below both Woodside and the broader market average for large caps
• Dividend Yield: 5.68% (fully franked, per latest figures)
• Year To Date Return: 42.8% – almost matching Woodside’s strong gains

Consistent, fully franked dividends are a feature here as well, with Ampol’s last interim dividend coming in at $1.85 per share (fully franked). Its lower P/E ratio draws attention for value hunters, though its business is more exposed to the ups and downs of retail volumes and margins.

Valuation comparison

Both Woodside and Ampol offer eye-catching yields and have strong profit track records, but a few numbers really stand out when viewed side-by-side:

Ampol’s much lower P/E signals a potentially cheaper earnings valuation compared to Woodside, at least based on recent profits. Its higher (and also fully franked) dividend yield adds to the appeal for income seekers. Do note: the reported EPS and P/E for Ampol line up mathematically, but Woodside’s numbers appear less in sync, possibly due to differences in the basis of the earnings measurement shown.

Recent share price performance

Both companies have delivered big gains for shareholders recently, but their price histories reveal a bit more detail. Comparing the past month:

• Woodside Energy: Rose from $33.78 (21 Aug) to $32.42 (18 Sep), actually showing a small drop over this period despite a strong YTD number. Its year to date return is up 44.3%.
• Ampol: Climbed from $39.85 (21 Aug) to $43.13 (18 Sep), reflecting a net gain for the span, and a 42.8% year to date return.

The momentum is strong for both, but Ampol’s recent month shows steadier progress.

Which is the better buy?

On a pure numbers basis, I’d lean toward Ampol right now. It trades on a much lower P/E than Woodside Energy (7.18 versus 14.32), offers a higher fully franked yield (5.68%), and has kept pace with Woodside’s strong share price run so far this year. While Woodside’s scale gives it stability and huge assets, that’s already reflected in its rich $61 billion market cap. Ampol’s business is more retail-facing, but its valuation and income look appealing for everyday investors. That said, Woodside’s larger projects and global reach do offer defensive qualities if you’re chasing blue chip exposure and long-term oil and gas. For value and income at today’s prices, my pick would be Ampol – but both names deserve a spot on any energy watchlist.

The post Woodside vs Ampol: Which ASX energy stock should you buy? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• I’m planning to retire with $1 million in superannuation. How much passive income can I earn? 
• Santos vs Woodside: Which ASX energy share is better value?
• Here’s the earnings forecast out to 2028 for Woodside shares
• 5 things to watch on the ASX 200 on Friday

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.