Is Woodside Petroleum Limited (ASX: WPL) a great dividend share for investors to consider?
What’s been going on with Woodside?
COVID-19 has been a very painful period for Woodside. The business has been under pressure for a while by some critics for environmental reasons. But lockdowns and restrictions saw global oil demand plunge – and the oil price fell heavily as well.
The Woodside share price is still down by 46% from the price in early January, though it has gone up around 29% since the market bottomed in March.
Woodside is currently holding an investor briefing today, where it said that it delivered excellent operating performance in a difficult year.
At the event, Woodside said its strong performance allowed it to narrow its full-year output guidance to 99 million to 101 million barrels of oil equivalent.
The oil business said that Scarborough is a globally competitive development which has the potential to be a game-changer for Woodside, producing net cashflow of around $35 billion over its field life.
The deferral in March of the final investment decision allowed the project team to extract additional value for both Scarborough and the Pluto Train 2 with increased offshore capacity and optimising the development schedule.
Woodside estimates that the targeted 20% increase in Scarborough’s upstream capacity can be achieved with “very modest capex” and virtually no cost impact on the downstream.
Interestingly, the oil business said that it’s setting new targets for direct carbon emission reductions in support of the goal to be net zero by 2050. It’s aiming for reductions of 15% by 2025 and 30% by 2030. This may be achieved by things like carbon capture and storage, limiting emissions through efficient operations and using high quality offsets.
It also pointed out it’s investing in hydrogen, it’s an early mover.
Is it a great ASX dividend share buy?
A resource business’ dividend is only as secure as its earnings. And earnings can be very volatile.
In 2021 there could be a shorter term bounce for the Woodside share price, earnings and dividend. So there may be some merit to buying whilst sentiment is still low.
But I don’t think it’s wise to invest for short term reasons, it’s better to invest for the long term. If you make great returns in the short term, then wonderful. But short time optimism can quickly change, particularly in an industry like oil.
There are other ASX dividend shares that I think offer much more reliable income such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which I covered at length here.
