If I invest $10,000 in Woolworths shares, how much passive income will I receive in 2026?

Is the passive income from Woolworths attractive enough?

| More on:
A man in a supermarket strikes an unlikely pose while pushing a trolley, lifting both legs sideways off the ground and looking mildly rattled with a wide-mouthed expression.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Woolworths' share price has dropped by 20% since August 2025, creating a buying opportunity following underperformance compared to Coles.
  • Analysts project significant dividend growth for Woolworths, with dividends expected to rise from 84 cents in FY25 to $1.35 by FY28.
  • With a $10,000 investment, projected FY26 dividends translate to a 3.7% yield, providing steady passive income despite mixed analyst ratings.

A fall in the Woolworths Group Ltd (ASX: WOW) share price has opened up an opportunity for investors to buy the supermarket business at a cheaper valuation for passive income.

As the above chart shows, the Woolworths share price has fallen by 20% since 21 August 2025, which I'd describe as a large drop for a business that's meant to be a defensive ASX share.

At the moment, it seems that Woolworths is losing out to Coles Group Ltd (ASX: COL). Coles' sales growth is outperforming Woolworths.

However, just because the supermarket business is underperforming its key rival, doesn't mean it can't still be a good option for passive income.

Dividend growth expected for Woolworths shares

In FY25, the business declared an annual dividend per share of 84 cents per share. It's expected to get better from here.

Analyst projections suggest the Woolworths annual dividend per share could steadily increase over the next few years. The forecast on Commsec suggests payout growth to 99 cents per share in FY26, representing 18% growth year-over-year.

In the 2027 financial year, it could see another dividend hike of 14% to $1.13 per share.

In FY28, owners of Woolworths shares could see another dividend increase to $1.35, representing a year-over-year increase of around 20%.

Passive income from a $10,000 investment

Let's focus in on what FY26 could look like in terms of the passive income.

If the business does pay an annual dividend per share of 99 cents, that would translate into a dividend yield of 3.7% excluding franking credits and 5.3% including franking credits, at the time of writing.

With a $10,000 investment in Woolworths shares, that would translate to approximately $370 of cash dividends and $530 of grossed-up dividend income, including franking credits.

Is this a good time to invest in Woolworths shares?

Analysts currently don't seem overly bullish on the business. According to CMC Markets, there are currently nine hold ratings on the business with two buy ratings.

But, the average price target of those analysts does suggest a positive outcome. A price target is where the broker thinks the share price will be in 12 months from now.

CMC Markets says the average price target is $29.89, suggesting a solid double-digit return (in percentage terms) at the time of writing.

Even the lowest price target of those price targets of $28.25 suggests a potential positive outcome over the next year.

I don't expect Woolworths shares to smash the market in the next few years. But, this could be a good time to consider the supermarket business for passive income.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

A couple of friends at a rooftop party enjoying some hot and tasty Domino's pizza
Consumer Staples & Discretionary Shares

Domino's Pizza share price rips 12% on trading update

A trading update from executive chair Jack Cowin has raised investors' confidence.

Read more »

Close-up Of Empty Shopping Cart Near Person's Hand Using Calculator Over White Desk
Consumer Staples & Discretionary Shares

Is inflation about to take the steam out of Coles shares?

A leading investment expert delivers his verdict on Coles shares.

Read more »

A happy farmers sifts his fingers through grain, indicating a good crop and higher prices.
Consumer Staples & Discretionary Shares

GrainCorp shares tumble 11% as profit disappoints investors

Solid operational performance wasn’t enough to offset weaker earnings.

Read more »

A young boy points and smiles as he eats fried chicken.
Consumer Staples & Discretionary Shares

Is this ASX food producer a takeover target after its "deeply disappointing" share price performance?

Share price weakness could raise the possibility of a buyout offer.

Read more »

A young boy points and smiles as he eats fried chicken.
Broker Notes

Down 22% this year, does Macquarie rate Inghams shares a buy?

Is it time to buy low on this struggling stock?

Read more »

Three cows jumping over a field of grass
Broker Notes

Why Macquarie expects this dividend paying ASX 300 stock to leap 19%

Macquarie forecasts a strong year ahead for this ASX 300 dividend stock.

Read more »

Woman customer and grocery shopping cart in supermarket store, retail outlet or mall shop. Female shopper pushing trolley in shelf aisle to buy discount groceries, sale goods and brand offers.
Consumer Staples & Discretionary Shares

Is the tide starting to turn for Woolworths shares?

The team at Wilson Advisory believe Woolworths is a compelling investment opportunity.

Read more »

jumbo share price - lottery ball numbers
Consumer Staples & Discretionary Shares

Does Macquarie rate Lottery Corporation shares a buy, hold or sell?

Investors are dying to know...

Read more »