Woodside Energy Group Ltd (ASX: WDS) shares represent one of the few major ASX blue-chip shares that usually provides strong dividends but doesn't come from the ASX financial share or ASX mining share space.
Woodside is a major oil and gas ASX share, with projects spread across multiple continents. For example, it has projects in or near to Australia, North America and Africa.
The business regularly likes to give investors a significant portion of its cash flow each year in the form of dividends. Analysts from UBS have recently outlined what they think could happen with the Woodside dividend in the coming years, after the latest announcement of Woodside selling a stake in one of its assets to Williams.
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FY25
The Woodside 2025 financial year follows the calendar year, so it's not quite finished yet.
UBS noted the business recently announced it had signed a closed a transaction with Williams, which has acquired a 10% stake in the Louisiana LNG (LLNG) and an 80% interest (and operatorship) in the Louisiana LNG PipelineCo together for US$250 million. Total proceeds were $378 million including the purchase price and the share of capital expenditure in the year to date.
The broker views this partnership positively, as it brings Williams' gas transport and sourcing expertise to LLNG and provides relief to Woodside's balance sheet.
UBS predicts that Woodside could pay an annual dividend per share of US 86 cents. At the time of writing, that translates into a grossed-up dividend yield of 7.7%, including franking credits.
FY26
The broker is currently forecasting that Woodside's net profit could decrease in FY26 to US$1.2 billion, meaning the dividend may be impacted.
The dividend is paid for by the profit generation of a business, so if a business decides on its payout level based on a dividend payout ratio of the net profit, the dividend will logically be reduced.
UBS is forecasting that the Woodside dividend per share could decline to 52 cents per share, which translates into a forward grossed-up dividend yield of 4.6%, including franking credits, at the time of writing.
FY27
While FY26 may be challenging for profitability, the 2027 financial year could see profit jump, funding a significant recovery in the dividend per share.
UBS predicts the Woodside dividend per share could rise to US 79 cents per share. That translates into a grossed-up dividend yield of 7.1%, including franking credits.
FY28
The 2028 financial year could get even better as the company's cash flow and profitability is expected to increase significantly.
FY28 could see Woodside's dividend per share grow to US 95 cents per share. At the time of writing and the current valuation, that would bring Woodside's grossed-up dividend yield to 8.5%, including franking credits.
FY29
The final year of this series of projections is the 2029 financial year. Interestingly, UBS currently predicts that FY29 may not be as good as FY28.
The net profit could potentially drop by around 10% and this could lead to a reduction in the dividend per share to US 86 cents.
That would translate into a grossed-up dividend yield of 7.7%, including franking credits.
Time will tell how close these predictions are to reality, with changes to resource prices being a key factor in the potential outcomes.
