Woolworths Dividend has seen a spike in 2021, with an increase in EPS. Following on from many blue-chips WOW is seeking to return $2 billion to shareholders in the form of a buy-back.
Woolworths Dividend Summary
| DPS | $1.08 |
| Gross DPS | $1.5429 |
| Dividend yield | 2.69% |
| Gross yield | 3.84% |
| Payout Ratio | 95% |
| DRP | Yes |
| DRP Discounts | No |
Woolworths Dividend Dates 2021
| Summary | Interim Dividend | Final Dividend |
|---|---|---|
| Per-share | $0.88 | $0.90 |
| Ex-div date | 4 March 2021 | 2 September 2021 |
| Pay date | 14 April 2021 | 8 October 2021 |
Woolworths Dividend History Graph
Woolworths typically announces a dividend with the release of its half-year results in February and full-year results in August as seen in their financial calendar. WOW Dividends are typically paid twice a year, in April (interim dividend) and October (final dividend).
WOW has paid dividends every year since 1993. Including the 2008 GFC, and COVID-19 recessionary period. We also saw the group pay a special dividend in 2018. Woolworths pays dividends that are fully franked. They also offer a Dividend Reinvestment Plan (DRP).
Woolworths Dividend Yield Comparison
WOW current gross dividend yield is 3.84%. This is in-line with the four big banks (CBA, WBC, NAB, ANZ), and the market average of 3.24%.
The current WOW yield of 3.84% far exceeds the Average Term Deposit rate of 0.4%
The disparity in yield is why we have seen a large number of investors turn to the stock market searching for yield.
Net Woolworths Dividend Yields Over Time
We can see WOW's net dividend yield has averaged a rate of around 3%. From this, we can see WOW's current net yield of 2.69% is slightly below its historic average.
We can see a large increase in yield and a corresponding crash to the Woolworths dividend in 2016. This is related to share price movements as the share price was reaching lows corresponding to WOW failed expansion plans. As the companies EPS took a hit the dividend yield crashed.
Woolworths Dividend Payout Ratio
A companies dividend payout ratio is the ratio of the total dividend sum paid out relative to the net income of the company. It is the percentage of earnings paid to shareholders in dividends.
In the FY21 report, Woolworths announced a $2 billion off-market share buy-back and declared a second-half dividend of 55 cents per share, bringing our full-year dividend to 108 cents per share, a 14.9% increase on FY20. Woolworths Group’s buy-back and the final dividend will return approximately $1.1 billion of franking credits to shareholders.
Woolworths Off-market buy-back
A share repurchase is where a company will buy back its shares from investors. This can be completed one of two ways; via an on-market buyback or off-market buyback.
In an off-market buyback, the company will offer investors the opportunity to sell their shares back to the company at a fixed price. This action reduces the total number of shares outstanding, in return investors will own a larger percentage of the company and the share price will increase to reflect this.
The company will then either cancel the shares or hold them, so as they are not publicly traded. The EPS of the company will be artificially raised as the formula earnings/shares have been altered whereas the number of shares PE may temporarily decrease due to an increase in EPS. Learn more about Share Buy-Backs Here.
On 26 August 2021, the Group announced a capital return of $2 billion to shareholders by way of an off-market buy-back. The buy-back is also expected to return approximately $840 million of franking credits to shareholders.
Woolworths Share Price
Woolworths Dividend Policy
Woolworths targets a payout ratio target of 70% to 75% of profit after tax, which is usually fully franked.
Due to the Endeavour demerger, the group’s earnings will be slightly reduced, as such we will see the dividend amount reduce. The corresponding share price reduction should keep the yield similar. Endeavour plans on maintaining the group’s dividend policy.
When Will my Woolworths Dividends be paid?
The Group typically announces a dividend with the release of its half-year results in February and full-year results in August. Dividends are typically paid twice a year, in April/March (interim dividend) and September/October (final dividend). Payment dates are listed on the financial calendar.
Woolworths Dividend Reinvestment Plan (DRIP)
Does WOW Offer a Dividend Reinvestment Plan? WOW does currently offer a Dividend Reinvestment Plan (DRP).
A DRIP or dividend reinvestment plan allows investors to automatically reinvest their dividends for additional shares in the company. Using this method, the investor will still receive the franking credit and will still be taxed on the cash value of their dividend.
The simplest way to elect to participate in a company’s DRIP is through the related share registry (i.e. Computershare or Link Market Services).
- In Computershare it’s as simple as going ‘my profile’- ‘Reinvestment plans’ and selecting the company and electing to participate in full or partially. That is either the entire amount or a partial amount of your dividend is reinvested.
- On Link you simply click view details of the company of interest and update it in the ‘payments and tax’ section.
For more information check out our ASX DRIP VS NON-DRIP Guide.
