Did OPEC+ just crimp the outlook for the 2024 Woodside dividend?

Woodside shares delivered an all-time high final dividend in April.

| More on:
A mature aged man with grey hair and glasses holds a fan of Australian hundred dollar bills up against his mouth and looks skywards with his eyes as though he is thinking what he might do with the cash.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Soaring Woodside Energy Group Ltd (ASX: WDS) dividend payouts over the last two years have attracted the interest of passive income investors.

With profits rising amid higher oil and gas prices, so too have the Woodside dividends.

The past 12 months saw the S&P/ASX 200 Index (ASX: XJO) oil and gas stock pay an all-time high final dividend of $2.154 per share, which hit eligible shareholders' bank accounts on 5 April. The interim Woodside dividend of $1.243 per share was paid on 28 September.

That equates to a (rounded) $3.40 per share in fully franked dividends over the year.

At the current Woodside share price of $30.85, this works out to a juicy trailing yield of 11%.

That means a $10,000 investment today could return $1,100 a year in passive income. With potential tax benefits from those franking credits.

Of course, much of next year's Woodside dividend payout hinges on the oil price.

Which brings us to our headline question, did OPEC+ just throw a spanner in the works?

Is the Woodside dividend at risk from squabbling at OPEC+?

Yesterday (overnight Aussie time) the Organization of the Petroleum Exporting Countries and its allies (OPEC+) held their delayed and much anticipated virtual meeting to determine the cartel's production levels for the first quarter of 2024.

But things didn't go exactly to plan.

Squabbling among some of the members saw the Brent crude oil price slide 2.2% overnight to US$82.82 per barrel. That's down 14% since 27 September, when that same barrel was worth US$96.55. And barring a turnaround, that could dent the Woodside dividend in the year ahead.

While Saudi Arabia and some of the wealthier members appeared eager to extend and even increase existing production cuts, some of the poorer nations were not as keen.

Saudi Arabia extended its own one million barrel per day production cuts through Q1 2024. And other members, including Russia and the UAE, agreed to slash a combined 900,000 barrels per day from their output.

But Angola may have helped crimp the outlook for the Woodside dividend after its spokesman said the country would not be cutting 200,000 barrels per day from its production, as OPEC+ had instructed.

According to Angola's OPEC governor Estevao Pedro:

We will produce above the quota determined by OPEC. It is not a matter of disobeying OPEC. We presented our position, and OPEC should take it into consideration.

The wording of the new agreement also appears to make the production cuts optional, rather than a firm contract. That leaves the door open to potentially higher oil supplies than OPEC+ would like to see in Q1 2024 should member nations opt to pump more crude.

That might prove good news to motorists at the petrol station.

But it could see the final 2024 Woodside dividend come down from 2023's all-time highs.

Motley Fool contributor Bernd Struben 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 Scott Phillips.

More on Dividend Investing

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

3 ASX dividend shares to buy for a passive income boost

Analysts believe these shares are top buys.

Read more »

Woman with headphones on relaxing and looking at her phone happily.
Dividend Investing

How I'd invest $250 a month in ASX dividend shares to target a $24,000 annual second income

Passive income is within the reach of ordinary Aussies, just like you. Yes, I said you!

Read more »

Person handing out $100 notes, symbolising ex-dividend date.
Dividend Investing

How much will Wesfarmers shares pay you in dividends in 2024?

Will Wesfarmers continue to lift its dividends in 2024?

Read more »

Smiling woman with her head and arm on a desk holding $100 notes out, symbolising dividends.
Dividend Investing

Buy NIB and this ASX 200 dividend stock now

Analysts say these shares are buys for income investors.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

This ASX All Ords stock is predicted to pay a 9% dividend yield in 2025!

Huge cash flow is predicted to keep flowing from this investment.

Read more »

a young farmer stands back and admires his work in arranging bales of hay to form a house shape with two bales balancing against each other to form a roof, perched on bales tipped on their side in an abstract house shape on a freshly harvested paddock.
Dividend Investing

Buy 11,923 shares of this super ASX dividend stock for $3,100 per year in passive income

I think this stock is a strong choice for dividends.

Read more »

Smiling woman upside down on a swing with yellow glasses, symbolising passive income.
Dividend Investing

$20,000 in savings? Here's how I'd aim for $20,000 in passive income

Here’s how I’d target $20,000 in passive income every year from ASX shares by investing $20,000 today.

Read more »

Scared looking people on a rollercoaster ride representing the volatile Mineral Resources share price in 2022
Resources Shares

How is the Fortescue share price down 3% today?

Shareholders should be cheering today's Fortescue losses.

Read more »