WOODSIDE ENERGY – A POPULAR INVESTMENT WITH RETIREES.
On 1 June 2022, BHP merged its oil and gas business with Woodside Petroleum to create a new global top 10 independent energy company by production and the largest energy company listed on the ASX called Woodside Energy (WDS.AX)
The merger has been viewed favourably by the market, and since 1 June 2022 through 13 September 2022, WDS.AX has seen the share price rise 9% from $30.19 per share to $33.14 per shares.
Dividends remain on track to return over 5% yield for the year and will continue to remain fully franked providing further returns. For the 2020/2021 financial year, Woodside paid out a fully franked dividend of $0.52 and in the 2021/2022 financial year it paid out $1.87 (fully franked).
The key to the increase in the share price is earnings per share (EPS). Earnings are the engine of share price appreciation. Growing earnings also underpins the ability of a company to consistently increase its dividend.
Let’s prove these statements above by looking at the WDS.AX graph. Load up the WDS.AX graph in VectorVest and put on earnings (EPS) and Dividends (DIV). Set the graph back 3 years. Notice from the end of 2019 through until early 2021, EPS was falling consistently. What did the share price do? It fell from a high of $36.28 in January 2020 and remained trapped in a channel between $17 and $23 dollars until 2022 when earnings started to rise again.
Now look at the DIV line on your graph: VectorVest reports annual, regular, cash dividends. Special distributions, one-time payments, stock dividends, etc., are not generally included in DIV. Notice the correlation between EPS and DIV. Dividends continued to slide until earnings picked up. The pickup in EPS occurred in late 2021 which gave you an early signal that the share price and dividends were about to turn around.
Have you checked the DIV and EPS profiles for the shares you hold using VectorVest?
The video this week will look at several companies demonstrating the correlation between dividend and earnings. CLICK HERE to see the video.
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