The Woolworths Group Ltd (ASX: WOW) dividend surged following the company’s robust performance in its full-year results for 2021. Despite achieving growth across key metrics, investors sold off the conglomerate’s shares, before bargain hunters swooped in.
At Wednesday’s market close, Woolworths shares finished the day 0.03% down to $40.79.
Let’s take a close look at the Woolworths dividend policy.
A look into the Woolworths dividend
The formidable company paid out an interim dividend of 53 cents on 14 April. The dividend was 15.2% higher than the 46 cents declared in the prior corresponding period.
More recently, Woolworths’ final dividend came to 55 cents which was paid on 8 October. Notably, this happened to be the highest amount given to shareholders since its full-year results in 2019.
Both interim and final dividends this year were also franked at a rate of 30%, consistent with the previous 20 years. This means that those who were eligible for any of 2021’s dividends, received Australia’s much loved tax credits.
The full-year dividend of 2021 stood at 108 cents, a 14.9% lift from the 94 cents recorded in the 2020 financial year.
In addition, the company offered investors to participate in its dividend reinvestment plan (DRP). No discount was applied to the volume-weighted average price.
The payout ratio can be calculated by taking the dividends per share and dividing it by earnings per share (EPS). Essentially, it is the percentage of earnings paid to shareholders in dividends.
The current dividend payout ratio stands at 65.45%.
It is worth noting that Woolworths traditionally targets a payout ratio of 70% to 75% of profit after tax. The Woolworths buy-back and final dividend returned about $1.1 billion of franking credits to shareholders
Recap on the Woolworths share price
In 2021, the Woolworths share price has continued to tread higher to register gains of more than 17%. When factoring in the last 12 months, its shares are slightly further in the green, up 20%.
Woolworths has a dividend yield of 2.65% and commands a market capitalisation of roughly $47.93 billion.