The ASX energy share Woodside Energy Group Ltd (ASX: WDS) has been heavily sold off in the last several weeks, largely spurred by volatility in energy markets. This decline may be providing investors an opportunity to gain a large passive income boost.
Woodside is one of the biggest energy businesses in the Asia Pacific region, but it's just as exposed to energy prices as it was a few years ago before various acquisitions.
One of the advantages of buying after a share price decline is that investors can get a stronger dividend yield. For example, if a business had a dividend yield of 7% and the share price fell 10%, the yield would then become 7.7%.
As the chart below shows, since the start of 2025, the Woodside share price has fallen 13.5%. It has dropped 22.75% over the last 12 months.
Let's have a look at what's expected of the ASX energy share, income-wise.
Dividend projections
Woodside is typically known for paying a fairly generous dividend to shareholders each year.
While profit is projected to take a sizeable hit in FY25 and FY26 largely because of lower energy prices, the dividend yield could still be very pleasing because of the lower Woodside share price.
According to the forecasts on Commsec, the ASX energy share is forecast to pay a grossed-up dividend yield of approximately 8%, including franking credits, in the 2025 and 2026 financial years. In most people's books, that would be a large and pleasing payout.
But, if the predictions on Commsec comes true, it means the business could see a grossed-up dividend yield of 12.2% in FY27, including franking credits. If Woodside's profit can recover in the coming years, which is tricky to predict because of the variable energy prices, then longer-term investors could get a very rewarding payout.
New projects to drive a boost to the payout?
Woodside's profit could see a boost in the coming years as its projects are developed and become fully operational. That could also be supportive for the Woodside share price.
The company's management often touts its decade-long track record of paying shareholder dividends at the top end of its dividend payout ratio. In 2024, it delivered a fully franked dividend with a payout ratio of 80%.
At the company's recent annual general meeting, Woodside Chair Richard Goyder talked about the company's financial outlook and how that could help shareholders:
As Meg noted last week when announcing our decision to take forward Louisiana LNG, we forecast Woodside's annual portfolio sales volumes to be almost 50 percent higher in the 2030s than they are today, and annual net operating cash increasing to over US$8 billion in this period.
This would represent a step-change in value creation and provide us with additional options to reward our shareholders.
As these figures demonstrate, we reward investors today through strong dividends, while investing in a high-quality, diverse portfolio to create future value and position us to successfully navigate the energy transition.
Our shareholders will benefit from Woodside's proven track record of operational excellence, world-class project delivery and financial discipline.
Resource businesses tend to go through cycles, so this apparent weaker point for the Woodside share price could be an opportunity for investors who are willing to look past environmental concerns.
