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.


Past performance is not a reliable indicator of future performance. Any forecasts and backtests used or discussed in this email are intended as a guide only and actual results may be affected by known or unknown risks and uncertainties and therefore may differ materially from results ultimately achieved.

Residents of Australia:
VectorVest Inc (ARBN 654 498 218) and Russell Markham are Authorised Representatives (No. 1294036 and No 1294037) of Centra Wealth Pty Ltd (ABN 39 158 802 450) which holds an Australian Financial Services License (AFSL No. 422704). Please refer to our Financial Services Guide which provides you with information about us and services we can provide. Any advice is general in nature and has not considered your personal objectives, financial situations or needs. You should consider whether the advice is suitable for you and your personal circumstances. Backtest results and Model Portfolio performance and profit calculations are theoretical and calculated by VectorVest Inc and do not reflect actual investments in the companies mentioned. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Actual results may be affected by known or unknown risks and uncertainties that cannot be reasonably included in a backtest, and therefore these outcomes can differ materially from backtested expectations. As a result, past performance should not be relied on as a guarantee for future results.

Residents of the United Kingdom:
European Financial Publishing Limited T/A VectorVest UK (VectorVest) is authorised and regulated by the Financial Conduct Authority under register number 543038. You should remember that the value of investments and the income derived therefrom may fall as well as rise and you may not get back the amount that you invest. Past performance is not a reliable guide to the future. This material is directed only at persons in the UK and is not an offer or invitation to buy or sell securities. If investors are in any doubt of the suitability of an investment given their individual circumstances, they are recommended to contact an investment manager or independent financial adviser who may be able to provide tailored advice. Opinions expressed whether in general or both on the performance of individual securities and in a wider economic context represent the views of VectorVest at the time of preparation. They are subject to change and should not be interpreted as investment advice. VectorVest and connected companies, clients, directors, employees and other associates, may have a position in any security, or related financial instrument, issued by a company or organisation mentioned on this site. European Financial Publishing Limited is a company incorporated in Scotland under Company Number SC357322 with its registered address at Exchange Tower, 19 Canning Street, Edinburgh EH3 8EH. Email: [email protected].

European Publishing Company is covered under the jurisdiction of the Financial Ombudsman Service (FOS). Should any complaint made not being resolved, you may refer the matter the FOS for their consideration. Please note that there are some limitations on the complaints that the FOS will consider. Details can be found on the FOS website. You can contact the FOS as follows:

The Financial Ombudsman Service
Exchange Tower
E14 9SR You can call the Financial Ombudsman Service on 0800 023 4567 or Email: [email protected]