Woodside Energy Group Ltd (ASX: WDS) shares are having another tough session on Thursday.
In morning trade, the energy giant's shares are down 6% to $25.23.
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Why are Woodside shares sinking?
There have been a couple of catalysts for today's share price decline.
The first is further weakness in the oil price overnight. This was driven by concerns over rising supply and faltering demand. The worst mix for the price of a commodity.
The other (and main) reason that Woodside shares are falling today is that they are going ex-dividend this morning.
When a share trades ex-dividend, it means that the rights to an upcoming dividend payment are now locked in. As a result, anyone picking up shares won't receive this dividend on pay day. Instead, the dividend will go to the seller of its shares even though they no longer own them.
And given that a dividend is cash and forms part of a company's valuation, its share price will usually fall in line with the value of the dividend on the ex-dividend date. After all, you wouldn't want to pay for something that you won't receive.
The Woodside dividend
Last month, Woodside released its half year results and reported a 19% decline in operating revenue to US$5,988 million and a 13.9% decline in underlying net profit after tax to US$1,632 million.
In light of this profit decline, the Woodside board cut its fully franked interim dividend by 14% to 69 US cents per share. This is the equivalent of approximately A$1.02 per share.
And based on the Woodside share price at yesterday's close, $26.83, this interim payout represents an attractive 3.8% dividend yield.
Eligible shareholders can look forward to receiving this dividend on 3 October.
Should you buy the dip?
Analysts at Morgans remain very positive on Woodside's shares. The broker currently has an add rating and $33.00 price target on them. This implies potential upside of 25%+ for investors over the next 12 months.
Commenting on its bullish view of the stock, the broker recently said:
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.
Increasing our conviction in our call is the progress WDS is making through the current capex phase, while maintaining a healthy balance sheet and healthy dividend profile. WDS still has to address long-term issues in its fundamentals (such as declining production from key projects NWS/Pluto), but will still generate substantial high-quality earnings for years to come.
