Today, Woolworths Limited (ASX: WOW) shares fell 4.2% in early morning trade.
Source: Yahoo! Finance
The sharp sell-off comes on the back of the supermarket giant's announcement on Friday that its 2015 net profit fell 12.5% year over year, and after two credit rating downgrades.
It's been well known for some time that Woolies is facing pressure from investors to resurrect its flailing Masters Home Improvement business. It's also facing pressure to be 'battle-ready' for increased competition from the likes of Aldi, Coles – owned by Wesfarmers Ltd (ASX: WES), Lidl and Costco.
Indeed, falling profits have again brought out Woolworths' permabears (i.e. those who are always negative on the grocery retailer's prospects) – which is evident from today's share price decline.
However, pleasingly, Woolworths' 2015 underlying profit, which excluded some one-off costs which are unlikely to appear this year, was roughly in line with the year prior.
A big, juicy, fully-franked, dividend
One bonus as a result of the share price falls is its dividend yield. The lower its share price trends, the higher its trailing dividend yield becomes.
Currently, with shares slightly over $26, Woolworths' trailing dividend yield has blown up to 5.3% fully franked, or 7.5% fully franked!
While the risks of falling profits are very real – and potential investors should always be conscious of the risks in any investment – in the face of growing competition, with a 7.5% dividend yield on offer, an investment in Woolworths' shares may be too good to ignore.
