If I buy 1,000 Woodside shares, how much passive income will I receive?

Would this energy giant be a good option for income investors?

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Woodside Energy Group Ltd (ASX: WDS) shares are a popular option for investors looking for passive income.

And it isn't hard to see why.

Each year, the energy giant shares a portion of its ample profits with its lucky shareholders.

For example, in FY 2023, the company paid out fully franked dividends of 140 US cents per share. This represented approximately 80% of Woodside's underlying net profit after tax of US$1,660 million, which was the top end of its targeted dividend payout range.

But those dividends have long since been paid to shareholders. What's next for Woodside shares and its dividend?

Let's take a look at what income investors could receive if they picked up 1,000 shares in Australia's leading energy producer.

Buying 1,000 Woodside shares

Firstly, to purchase 1,000 Woodside shares you would need to make a fairly large investment in the company.

At yesterday's close, the company's shares were changing hands for $27.63.

This means that you would need to invest $27,630 in order to snap up 1,000 Woodside shares.

But it sure could be worth the investment according to analysts at Morgans. That's because the broker has the company on its best ideas list with an add rating and $36.00 price target.

If the Woodside share price were to rise to that level, it would value those 1,000 shares at $36,000. That's 30% higher than the current market value of those units. Morgans commented:

A tier 1 upstream oil and gas operator with high-quality earnings that we see as likely to continue pursuing an opportunistic acquisition strategy. WDS's share price has been under pressure in recent months from a combination of oil price volatility and approval issues at Scarborough, its key offshore growth project. With both of those factors now having moderated, with the pullback in oil prices moderating and work at Scarborough back underway, we see now as a good time to add to positions.

Passive income

But let's now focus on the main event – passive income.

Morgans thinks that Woodside shares could generate a nice source of passive income this year and next.

The broker is currently forecasting a fully franked dividend of approximately A$1.25 per share in FY 2024. This equates to a dividend yield of 4.5% and would generate approximately A$1,250 in passive income.

And if you're willing to be patient, you will be rewarded with a bigger dividend in FY 2025 according to Morgans. It is forecasting a fully franked dividend of approximately A$1.57 per share for the next financial year.

This equates to a 5.7% dividend yield and would mean passive income of approximately $1,570 from your 1,000 Woodside shares.

In summary, that's a passive income of:

  • $1,250 in FY 2024
  • $1,570 in FY 2025

Overall, this could make Woodside shares worth considering if you're not averse to investing in the energy sector.

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. 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.

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