Woodside Energy Group Ltd (ASX: WDS) shares may be among the most underrated ASX blue-chip options for passive income.
No dividend is guaranteed, but the ASX energy share giant is poised to make large profits and pay significant dividends over the next few years.
The business is exposed to volatile energy prices. But, energy is always needed and it's possible that events in the Middle East and rising energy demand (from users like data centres) could lead to relatively higher energy prices than what was seen in recent years.
Even if energy prices don't rise from here, Woodside is positioned to make solid profits with its scale and global project portfolio. Additionally, oil and gas shares typically trade on a relatively low price/earnings (P/E) ratio, enabling it to deliver a good dividend yield.
Let's see what analysts think could happen if someone invested $10,000 in Woodside shares, starting with the dividend projections.
Image source: Getty Images
FY27 potential payout
According to the projection on Commsec, the business could deliver an annual dividend payout of $2.223 in the 2026 financial year.
However, the focus of this article is the 2027 financial year. Using the projection on Commsec, the ASX energy share is estimated to pay an annual dividend per share of $2.344.
At the time of writing, that translates into a forward dividend yield of 7.4% excluding franking credits and a grossed-up dividend yield of 10.6%, including franking credits, at the time of writing.
If that projection comes true, it may be the largest dividend yield in the ASX blue-chip share area, potentially much better than what Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) may offer.
What would a $10,000 investment in Woodside shares do?
If someone were to invest $10,000 in Woodside shares, they would be able to buy 318 Woodside shares, with a little bit of change, at the time of writing.
With the 318 Woodside shares, investors could receive $745.39 of cash and approximately $319.45 of franking credits in FY27, for a grand total of $1,064.84 passive income.
Is this a good time to invest in the ASX energy share?
According to CMC Invest, there have been nine ratings on the business in the last three months. Of those nine ratings, three were buy ratings, five were hold ratings, and one was a sell rating.
Of those nine ratings, the average price target is $31.05, which is virtually where it's trading at today, which implies little movement over the next 12 months for the valuation.
Therefore, all of the return from the business over the next year could come from the passive income. For investors wanting some capital growth, there could be plenty of better ideas than Woodside shares at the current valuation.
