How does the Woolworths (ASX:WOW) dividend compare to its sector?

How much is Woolworths’ dividend worth today?
The post How does the Woolworths (ASX:WOW) dividend compare to its sector? appeared first on The Motley Fool Australia. –

As a major S&P/ASX 200 Index (ASX: XJO) blue chip share, Woolworths Group Ltd (ASX: WOW) shares have long held a reputation for being an ASX 200 heavyweight when it comes to dividends. But how does this reputation hold up today?

At the time of writing, the Woolworths share price has lost 0.69% this Monday and is going for $41.70 a share. That’s still pretty close to the company’s all-time high of ~$42 that we saw last week. That figure takes into account the recent demerger of Endeavor Group Ltd (ASX: EDV) of course.

So at this current share price, Woolworths offers a headline dividend yield of 2.43%.

Where does this come from? Well, Woolworths’ past 2 dividends. The grocery giant paid out an interim dividend of 53 cents per share in March of this year. Before that, its previous dividend payment was the final dividend of 48 cents per share that the company paid out in September last year.

Putting those two payments against the current Woolworths share price, and we get a yield of 2.43%. That yield grosses-up to 3.47% if we include the value of Woolworths’ full franking credits.

So how dies this yield compare to Woolies’ peers?

Well, let’s take a look.

WOW, look at that dividend!

So Woolworths’ most obvious peers are its rivals in the grocery space – Coles Group Ltd (ASX: COL) and Metcash Ltd (ASX: MTS). Coles competes with Woolworths with its own chain of grocery supermarkets, while Metcash is another competitor with its network of IGA-branded stores across the country.

So at the current pricing, Coles currently offers a dividend yield of 3.24%., or 4.63% grossed-up with full franking.

That comes from Coles’ two most recent dividends: an interim payout of 33 cents per share in March 2021, and a final dividend of 28 cents per share that shareholders will see hit their bank accounts in September.

In Metcash’s case, this company offers a current yield of 4.22% on current pricing, or 6.03% grossed-up. That comes from Metcash’s past two dividends of 8 cents and 9.5 cents per share respectively.

Why is the Woolworths dividend so low?

So you might notice that the Woolworths dividend seems to be a lot lower than its peers in its sector. 2.43% against 3.24% or 4.22%. So what’s going on here?

Well, in these three companies’ case, it seems to be related to the earnings multiple investors are currently willing to pay. Take the price-to-earnings (P/E) ratio of Woolworths. It’s currently sitting at 37.12. Compare that to Coles’ current P/E ratio of 25.01 or Metcash’s 17.77.

This tells us that investors are currently willing to pay a higher share price relative to earnings for Woolworths than Coles or Metcash. That means that investors are also willing to accept a lower dividend yield for Woolworths shares as a result.

The post How does the Woolworths (ASX:WOW) dividend compare to its sector? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Woolworths right now?

Before you consider Woolworths, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Woolworths wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Woolworths (ASX:WOW) share price slides despite new Uber Eats trial
ASX 200 Weekly Wrap: Miners drag ASX back to earth

Top brokers name 3 ASX shares to sell next week

2 ASX dividends shares with attractive yields

August has been a great month so far for the Woolworths (ASX:WOW) share price

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!