Woolworths Group Ltd (ASX: WOW) shares are marching higher.
Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed yesterday trading for $37.82. In early afternoon trade on Wednesday, shares are changing hands for $38.17 apiece, up 0.9%.
For some context, the ASX 200 is down 0.8% at this same time.
Today's outperformance is par for the course in 2026. Woolworths shares are now up 29.8% year to date, charging ahead of the 1.7% gains posted by the benchmark index this calendar year.
Atop those welcome capital gains, Woolworths is also popular with passive income investors for the stock's reliable, twice yearly dividend payments. Woolworths currently trades on a 2.4% fully franked trailing dividend yield.
Which brings us back to our headline question.
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Should you buy Woolworths shares for passive income?
Red Leaf Securities' John Athanasiou recently analysed the outlook for the Aussie supermarket giant (courtesy of The Bull).
"Australia's largest supermarket operator offers stable defensive earnings and a strong balance sheet," he said.
As for the passive income on offer, Athanasiou added, "It benefits from everyday demand and a dominant position in grocery retail supporting steady cash flows and dividends."
But he isn't ready to pull the buy trigger just now.
Explaining his hold recommendation on Woolworths shares, Athanasiou concluded:
However, margin pressure from cost inflation and competitive discounting limits growth prospects. While same store sales growth remains moderate, the company's resilience in consumer staples provides a solid foundation.
WOW is a reliable long-term holding, but lacks significant upside catalysts in the absence of operational improvements or digital expansion initiatives.
What's the latest from the ASX 200 supermarket?
Woolworths reported its half year results (H1 FY 2026) on 25 February.
Highlights for the six months to 4 January (before significant items) included a 3.4% year-on-year increase in sales to $37.14 billion. And earnings before interest and tax (EBIT) of $1.66 billion increased by 14.4%.
On the bottom line, Woolworths reported a half year net profit after tax (NPAT) of $859 million, up 16.4% from H1 FY 2025.
That saw management up the fully franked interim dividend payout by 15.4% to 45 cents a share.
"We are making progress on the strategy we outlined in August and have invested in value, our fresh offer, On Demand convenience and in-store execution," Woolies CEO Amanda Bardwell said.
Woolworths shares closed up 13.0% on the day of the results release.
