Well, it was bound to happen.
The spectre of oil prices staying lower for longer is looming over Woodside Petroleum Limited's (ASX:WPL) future dividends.
While the final dividend from 2014 will remain comparatively high when it is paid (thanks to high oil prices for most of 2014), shareholders are starting 2015 on the back foot and can expect substantially lower dividends and company earnings while low oil prices persist.
Investment bank JP Morgan believes the dividend could fall to as low as $1.49 or even $0.64 cents per share for the full year in 2015, down from an expected $2.58 or so currently.
For the record, that's a yield of 4.1% or 1.8% at today's prices, a sharp drop from the 7.2% investors enjoyed in 2014.
That's also assuming Woodside maintains its 80% payout ratio – no promises on that either.
With the petroleum giant's shares having lost only 5% for the year, despite a 55% decrease in the value of crude oil, shareholders could be in for a rude shock in the 2015 financial year.
Some analysts have even claimed Woodside could be worth as little as $18 a share or less, based on current prices.
Other producers like Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT) are also not immune, and investors in both of these companies can expect lower dividends and earnings in 2015 as well.
One small mercy for potential buyers is that at least these companies have lost value commensurate with the fall in oil prices, while Woodside still holds all of its value.
Those who are still buying Woodside Petroleum shares – roughly two million shares continue to change hands daily – may not be too impressed with what 2015 has to offer.
One small boon is a major drop in petrol prices throughout most of the country – unless you come from my native Townsville – that is expected to save the average household up to $1,000 this year.
With rising power bills, car registration, rates, insurance costs and all the rest of it, readers should take advantage of lower petrol prices to squirrel away a few dollars.
Invested wisely, the $1,000 you save on petrol this year could pay you $50 a year for the rest of your life – and that's before the benefits of capital gains, growing dividends, and franking credits.
If that sounds pretty good to you, The Motley Fool has the perfect way to get you started, with our FREE report on 3 Rock-Solid Dividend Stocks for the Great Dividend Boom.
