The Woodside Petroleum Limited (ASX: WPL) share price is an interesting one to consider for income.
Since the start of the 2022 calendar year, Woodside shares have climbed around 20%. In-fact, the Woodside share price just hit a 52-week high. Compare that to the S&P/ASX 200 Index (ASX: XJO), which has dropped 5% since the start of the year. A 25% outperformance in less than two months.
After a rapid correction of oil prices late last year on concerns about the impacts of Omicron, oil prices have rallied higher. It's now reaching a multi-year high.
A commodity business like Woodside Petroleum is heavily dependent on the resource price to be able to generate strong profits. The profit is what funds the dividend.
Is Woodside share price benefiting from the higher oil prices?
The latest quarterly update from the company showed a big increase in the 'realised price' and sales revenue.
Woodside's average realised price increased to $90 per barrel of oil equivalent, up 53% from the third quarter of 2021.
Sales revenue jumped 86% to $2.85 billion, whilst sales volume rose 22% to 31.8 million barrels of oil equivalent (MMboe).
So, the company is seeing a significant increase in revenue thanks to the higher price. It was the highest quarterly sales revenue on record.
It will soon be an even bigger oil business after signing a binding share sale agreement with BHP Group Ltd (ASX: BHP) for the merger of BHP's oil and gas portfolio with Woodside.
How big could the dividend be in FY22?
Ultimately, the dividend decision is for the Woodside board to decide.
But, analysts have had their best guess at what the FY22 dividend might be.
The broker Morgans reckons that Woodside is going to pay a grossed-up dividend yield of 6.6% in FY22 and 6.8% in FY23.
CommSec numbers suggest that the grossed-up dividend yield could be 9.75% in FY22 and 7.1% in FY23.
Is the Woodside share price a buy?
Investors consider several different things about Woodside, with its profit being an important component.
The oil giant recently announced some accounting changes including a non-cash, post-tax impairment reversal related to oil and gas properties of US$582 million comprising $319 million related to Pluto-Scarborough and $263 million to NSW Gas.
The calculation of the 2021 final dividend, to be announced on 17 February 2022, will exclude the impact of the impairment reversal on net profit.
Morgans rates Woodside as a buy, with a price target of $30.55.
The 2022 production guidance is between 92 MMboe to 98 MMboe, excluding the impact of the proposed merger with BHP.
Citi is currently 'neutral' on the business, with a price target of $23.83, though it notes production this year is expected to be a little better than it was thinking it would be.
