What is the current Woolworths (ASX:WOW) dividend payout ratio?

Here’s a peek into the supermarket giant’s recent dividends.

| More on:
businessman handing $100 note to another in supermarket aisle representing woolworths share price

Image source: Getty Images

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.

Should you invest $1,000 in Woolworths right now?

Before you consider Woolworths, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Woolworths wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

More on Dividend Investing