The Woolworths Group Ltd (ASX: WOW) share price is pushing higher on Wednesday morning.
At the time of writing, the supermarket giant's shares are up 2.5% to $36.29.
Why is the Woolworths share price pushing higher?
Investors have been bidding the company's shares higher this morning after responding positively to its full year results.
As we covered here, Woolworths recorded a 3.7% increase in normalised sales to $67,922 million and a 3.4% lift in normalised earnings before interest and tax (EBIT) to $3,223 million.
Analysts at Goldman Sachs were forecasting total sales of $67,261 million and EBIT of $3,205 million for the 12 months, which means the supermarket giant has delivered a result slightly ahead of expectations. This goes some way to explaining why the Woolworths share price is pushing higher today.
But that's not the only reason. Also getting investors excited today was the Woolworths dividend. Or should I say, Woolworths' dividends. That's because as well as declaring a final dividend, the company's board approved a special dividend.
It declared a fully franked final dividend of 57 cents per share, which is down 1.7% year on year, and a fully franked special dividend of 40 cents per share. The latter reflects the company's decision to return funds from the sell down of its stake in drinks giant Endeavour Group Ltd (ASX: EDV).
Commenting on the dividend, Woolworths' outgoing CEO, Brad Banducci, said:
In May we sold a 5% stake in Endeavour Group and will be returning the proceeds to our shareholders via a $489 million (40 cents per share) special dividend which will release $209 million of franking credits.
This brought the company's total dividends for FY 2024 to $1.44 per share, which represents an increase of 38.5% year on year. Based on where the Woolworths share price ended yesterday's session, this equated to an attractive 4.1% dividend yield.
Broker reaction
Goldman Sachs has been running the rule over the result and was relatively pleased with what it saw. Its analysts said:
WOW reported 2H24/FY24 results with group sales +7.1% YoY/5.6% YoY (2H24 2.0% vs GSe and +2.1% vs Visible Alpha Consensus Data [VA]), while EBIT was +3.6%/3.4% YoY (2H24 1.2% vs GSe and +3.1% vs VA consensus). Compositionally, AU Food was stronger (sales and EBIT), while NZ (stronger sales, weaker EBIT) and Big W (stronger sales, weaker EBIT) were weaker.
Net interest expense was slightly above GSe to NPAT for 2H24/FY24 -1.1%/-0.6% respectively (2H24 -1.8% vs GSe and -0.7% vs VA consensus). The company declared A$0.57/sh normal dividend and a A$0.4/sh special dividend, which is above GSe A$0.57/sh normal dividend.
Goldman currently has a buy rating and $40.20 price target on its shares. Though, this could change once it has updated its financial model.
