Are Woodside shares still a good buy for passive income?

A leading investment expert delivers his verdict on Woodside shares.

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Key points

  • Despite a 14% drop in oil prices, Woodside Energy maintained strong dividends, with a yield of 6.4%, and shares rising 10% over the past year.
  • Fairmont Equities' Michael Gable notes Woodside's potential benefits from a future rise in oil prices.
  • Woodside aims for a 50% increase in dividends by 2032, supported by an expected 55% rise in net operating cash flow, underpinned by robust demand and strategic projects.

Woodside Energy Group Ltd (ASX: WDS) shares have long been popular with passive income investors for the company's market beating dividend payouts.

Despite slumping energy prices, with the Brent crude oil price down around 14% over 12 months, the S&P/ASX 200 Index (ASX: XJO) energy stock still paid out two fully franked dividends over the year, totalling $1.667 a share.

And despite sliding 3.2% today to $26.06 a share, Woodside stock has also gained 10% since this time last year.

At the current price, Woodside shares are trading on a fully franked trailing dividend yield of 6.4%.

That's a look in the rear view.

As for the year ahead…

Should you buy Woodside shares today?

Fairmont Equities' Michael Gable recently ran his slide rule over the ASX 200 oil and gas company (courtesy of The Bull).

"Crude oil prices were recently back near their lows in 2025 and well down from the peaks seen in 2022," Gable said.

Lower oil prices have hampered the performance of Woodside shares. But the company and its investors could be set for some tailwinds.

According to Gable:

We believe US crude oil production has hit a peak and strategic reserves having been substantially drawn down and supplies are much lower than many have anticipated. Woodside benefits when crude oil prices rise.

Still, Gable isn't ready to pull the buy trigger on the ASX 200 stock just yet, with a current hold recommendation.

"The share price chart of Woodside indicates the stock has bottomed amid seeing signs of it starting to move higher again," he concluded.

ASX 200 energy stock aims to turbocharge its passive income payments

Not only will Woodside shares benefit when crude oil prices rise, as Gable mentions above, but the company's passive income payouts should lift off as well, as we witnessed amid the high oil price environment of 2022 and early 2023.

But Woodside also has other plans to increase its dividend payouts.

At the company's 2025 Capital Markets Day on 5 November, management revealed how they're aiming for a 50% increase in dividends from 2024 levels to what Woodside plans to pay in 2032.

That passive income boost will be driven by expectations of a 55% increase in Woodside's 2024 net operating cash flow to around US$9 billion by the early 2030s, for a compound annual growth rate (CAGR) of more than 6%.

"Our strategy is supported by ongoing robust global demand for our products. Woodside's major growth projects will capitalise on this demand," Woodside CEO Meg O'Neill said on the day.

"Woodside generates durable cash flows and has rewarded shareholders with approximately US$11 billion in dividends since 2022," she added.

Woodside shares closed up 0.9% on the day.

Motley Fool contributor Bernd Struben 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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