Should holders of Woodside Petroleum expect a dividend payout?

Should holders of Woodside Petroleum expect a dividend payout?

Article image

Dividend payouts are a vital part of the return that investors get from owning stocks over time. But with new economic, it has become difficult to assess whether dividend forecasts are still useful. Could companies with even the most impressive track records cancel their payouts in order to preserve cash?

Let's take a look at Woodside Petroleum (ASX:WPL) and some of the most important dividend data-points to look out for... 

What makes a reliable dividend payer

1. Dividend safety

It’s important to know that a dividend is affordable, especially in times where there is a need to save cash. For this, you can use Dividend Cover – a go-to measure of a company's net income over the dividend paid to shareholders. It’s calculated as earnings per share divided by the dividend per share and helps to indicate how sustainable a dividend is.

Companies with a dividend cover of less than 1x suggest that the company can’t fund the payout from its current year earnings - and might be relying on other sources of funds to pay it. In present times, it must be asked how easy it is going to be to raise capital in order to simply pay a dividend.

  • Woodside Petroleum has dividend cover of 1.32.

2. High (but not excessive) dividend yield

High dividend yields are obviously appealing – but be careful of excessively high yields because they can be a sign of underlying problems. When the market suspects a company may be unable to sustain its dividend, the share price will fall, which in turn pushes the yield higher. A dividend yield of 10% or greater is a signal that a dividend may be too good to be true.

  • Woodside Petroleum has a dividend yield of 7.82%.

3. Dividend growth

Another important marker in assessing the reliability of a dividend is a track record of dividend growth - which can usually be used as evidence that the growth will continue. Consistent dividend growth can be a pointer to companies that are carefully managing their payout policies - and rewarding their shareholders over time. Rather than aggressively dishing out earnings, dividend growth companies tend to have more modest yields, but are better at sustaining their payouts.

  • Woodside Petroleum has increased its dividend payout 5 times over the past 10 years - and the dividend per share is forecast to grow by 58.0% in the coming year.

What does this mean for potential investors?

Yield, Growth and Safety are the three main pillars that support some of the most popular dividend investing strategies. But it's important to know that dividend payouts can be cut or cancelled very quickly when the outlook changes.

To get a fuller understanding of the dividend prospects for any stock, it's important to do some investigation yourself. Indeed, we've identified areas of concern with Woodside Energy that you can find out about here.


About us

Stockopedia helps individual investors make confident, profitable choices in the stock market. Our StockRank and factor investing toolbox unlocks institutional-quality insights into thousands of global stocks. Voted “Best Investment Research Tools” and “Best Research Service” at the 2021 UK Investor Magazine awards.

Woodside Energy's StockRank™

Super StockSpeculative

Woodside Energy's StockRank™

With a StockRank of 98, Woodside Energy is more attractive than 98% of the 2,031 stocks we cover in Australasia, according to our proprietary ranking system.

See the full StockReport

Absolutely Perfect

"Trialed multiple other platforms - this is by far my favourite. Other platforms do not even have half the stuff that you can find on Stockopedia. Love it!"

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.