Owning Woodside Energy Group Ltd (ASX: WDS) shares over the last 12 months has been very rewarding, as the chart below shows. A recent rise in energy prices could lead to a significant dividend increase.
At the time of writing, the Woodside share price has climbed 36% over the last 12 months. Not many ASX blue-chip shares can point to a performance as strong as that over the last year.
It's understandable why virtually all of the rise has happened this year. The business has benefited from the higher energy prices following the Middle East events, as well as (in my view) rising global energy demand (from areas like data centres).
Woodside's dividend has been volatile over the years, but the next couple of years could be particularly attractive for investors.
Image source: Getty Images
FY26
Woodside's financial year runs on the calendar year, so we're close to halfway through it, rather than almost at the end of FY26 like many other Australian businesses.
The company has already revealed its production for the first quarter of 2026.
It reported that it produced US$3.26 billion of operating revenue, up 7% compared to the fourth quarter of 2025, with an average realised quarterly price of US$63 per barrel of oil equivalent (BOE) – that was 11% higher than the fourth quarter of 2025, reflecting the benefit from market prices.
While energy prices increased, production volumes decreased 8% to 45.2 million barrels of oil equivalent (MMboe). Sales volume also decreased by 1% to 51.7 MMboe.
The business is also making significant progress on its projects, with the Scarborough project reaching 96% completion. Scarborough remains on budget and on track for the first LNG cargo in the fourth quarter of 2026.
It noted that the Scarborough floating production unit completed hook-up and began topside commissioning upon arrival in Australia.
According to Commsec's projection, the business could hike its annual dividend per Woodside share by almost 39% in FY26 and pay a grossed-up dividend yield of 10.75% at the time of writing, including franking credits.
FY27
The company's performance in FY27 could largely depend on energy prices and the pace of resolution of the situation in the Middle East, including how long it takes for normal energy flows to resume through the Strait of Hormuz.
Based on Commsec forecasts, the business is projected to be even more profitable in the 2027 financial year than in FY26.
Woodside is forecast to deliver a 24% hike in its FY27 annual dividend, which would be very pleasing for owners of Woodside shares.
The projection implies that the payout could rise by 24% year over year. The grossed-up dividend yield, including franking credits, at the time of writing, could be 13.3% for FY27.
FY28
The last year of this series of projections suggests Woodside's payout could return to a more normal level.
While the payout could be 23% lower than FY27's dividend, it could still be 32% higher than the FY25 annual payment.
At the time of writing, the FY28 grossed-up dividend yield could be 10.25%, including franking credits.
Based on these projections, Woodside shares are expected to deliver double-digit passive income returns over the next few years.
However, it has already risen following the Middle East events, so it may not be the best opportunity out there. Other ASX share ideas could be more appealing.
