Income investors have a lot of options to choose from on the Australian share market.
Thankfully for them, there are plenty of ASX 200 dividend stocks that can help them generate passive income.
One such option is Woolworths Group Ltd (ASX: WOW).
It is of course the company behind the eponymous Woolworths supermarket chain, as well as a number of complementary businesses such as Big W, My Deal, and PFD Food Services.
The company notes that it works hard to offer the best possible convenience, value, range and quality to the 24 million customers it serves each week across its growing network of businesses.
Passive income from this ASX 200 dividend stock
Woolworths is among the more generous companies out there when it comes to dividends.
Each year, it aims to payout 70% to 75% of its earnings to its shareholders. And given just how profitable its supermarkets are, this means total dividends of over a billion dollars were paid out in FY 2024.
But how much would you need to invest to get $40 of monthly income? Let's do some calculations.
According to a note out of Goldman Sachs, its analysts expect the ASX 200 dividend stock to pay fully franked dividends per share of $1.06 in FY 2025 and then $1.16 in FY 2026.
This means that investors could potentially pull in dividends of $1.11 per share over the next 12 months (Woolworths' final dividend of FY 2025 and interim dividend of FY 2026).
If this proves accurate, an investment of $15,000 would generate $509 of passive income over the period. If we divide this into monthly instalments, that would work out to be just over $42 per month.
But should you invest?
Goldman Sachs thinks investors should be snapping up Woolworths shares right now.
As well as offering decent passive income, the broker sees potential for its shares to rise strongly from current levels.
Last week, it put a buy rating and $38.90 price target on them. Based on the current Woolworths share price of $32.69, this would mean a return of 19% for investors.
This means that a $15,000 investment would be worth $17,850 if Goldman is on the money with its recommendation. It recently commented:
WOW is the largest supermarket chain in Australia with an additional presence in NZ, as well as selling general merchandise retail via Big W. We are Buy rated on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage.
Overall, this could make this ASX 200 dividend stock a great option for income investors when the market reopens.
