Owners of Woolworths Group Ltd (ASX: WOW) shares have seen their dividends bounce around over the past decade or so. But, analysts think the supermarket business could have turned a corner and deliver consistent growth.
Woolworths’ dividend is funded by various segments, including its Australian supermarkets, New Zealand supermarkets, business-to-business (B2B) food suppliers, BIG W, Petstock and more.
Following a 15.4% rise of underlying net profit to $1.6 billion in FY26, Woolworths decided to hike its annual dividend per share by 15.5% to 97 cents.
If the company continues to deliver higher profits, the dividend is likely to continue rising. Let’s have a look at what analysts think could happen with the Woolworths dividend in the coming years.
FY27
According to the projection on Commsec, the supermarket business is forecast to increase its payout by 15% to $1.115 per Woolworths share in FY27. Time will tell whether the business can deliver that level of growth, but the start of the 2027 financial year certainly looked promising.
In the Australian supermarket segment, total sales grew by 7.6% in the first eight weeks of FY27. It said that sales momentum was further strengthened during the period of the Disney Ooshies program, which is estimated to have added between 1.5 to 2 percentage points of additional sales growth. This is the largest and most important division, so strong sales growth is significant for the overall company.
New Zealand food total sales increased by 4.2% in the first eight weeks of FY27, with improved momentum in the fourth quarter reflecting some benefit from Disney Ooshies.
The business also said that BIG W total sales declined “modestly” in the first eight weeks, reflecting ongoing cost-of-living pressures on households, particularly budget customers and weaker trade in the everyday business.
Woolworths expects customers to remain value-focused in the year ahead and it’s committed to limiting the impact of rising costs with low and dependable prices.
The company said it aims to be even more efficient, leveraging technology to be more productive in order to reinvest in itself.
Trading conditions are expected to remain subdued for New Zealand supermarkets and challenging for BIG W.
The projected payout for FY27 translates into a potential grossed-up dividend yield of 4.1%, including franking credits, at the time of writing.
FY28
We’ll see how future financial years play out for the wider economy, but analysts expect the business can continue its dividend growth in future years.
The forecast on Commsec suggests the business could hike its annual dividend per Woolworths share by 7.2% to $1.195 in FY28.
FY29
The earnings and dividend are projected to become even better in the last year of this decade.
The projection on Commsec suggests that the business could hike its annual dividend per share by another 8.1% to $1.292 per share in FY29. That suggests the grossed-up dividend yield could be 4.8%, including franking credits, by the end of the decade.
Hopefully the payouts are more defensive going forwards. But, it’s not the biggest dividend yield around, so there could be other ASX shares that offer better returns.
The post Here’s the dividend forecast out to 2029 for Woolworths shares 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.