The Woolworths Group Ltd (ASX:WOW) share price is down 18.2% since the start of 2025. Is it time that you added WOW shares to your watchlist?
WOW share price in focus
Founded in 1924, Woolworths is a leading retail operator in Australia and New Zealand, with over 3,000 stores and more than 100,000 employees. As one of Australia’s largest companies by revenue and market share, Woolworths plays a significant role in the region’s retail sector.
The company’s core operations include supermarkets (operating under the Woolworths brand in Australia and Countdown in New Zealand), discount department stores under the Big W brand, and business-to-business (B2B) services through brands like PFD. However, Woolworths’ dominant 35%+ market share in the Australian grocery sector remains its key strength.
Woolworths is also a popular choice among ASX investors looking for dividend income. It has a strong track record of paying fully franked dividends, typically offering yields over 3%, and its revenue base, largely derived from consumer staples, provides a stable and defensive earnings stream. The company’s competitive edge lies in its scale, enabling efficient distribution and cost control, as well as its proximity to consumers, as many shoppers continue to choose supermarkets based on convenience and location.
The appeal of ASX Consumer Staples shares
The S&P/ASX200 Consumer Staples Index (ASX: XSJ) has delivered returns of -1.24% per year over the last 5 years. That compares to the broader ASX 200 which has returned 3.73% per year over the same period. Let’s explore why a consumer staples company like WOW could be a smart choice for your portfolio.
Big dividends
Consumer staples companies aren’t typically known for rapid growth, but where they usually excel is in providing consistent dividend income. Over the past 5 years, WOW has offered an average dividend yield of 2.92% annually.
This steady payout is linked to the nature of their business, which brings us to the next reason investors favour consumer staples companies…
Resilience
No company or sector is totally immune to recessions, but consumer staples companies are often better equipped than others to weather economic downturns. When the economy hits tough times (which is inevitable), discretionary spending always takes the hit first. Demand for staples remains relatively stable in comparison. This resilience can give companies like WOW a notable advantage over more cyclical sectors during a downturn.
Lower volatility
Another key benefit of consumer staples companies is their lower market volatility. Because the demand for their products and services is consistent, these businesses are less subject to economic cycles than sectors like resources and commodities.
Companies like Woolworths or Coles also have high market share which tends to give them more pricing power, so they can act as a price maker instead of a price taker. So, consumer staples companies can bring some stability to a diversified portfolio.
WOW share price valuation
One way to have a ‘fast read’ of where the WOW share price is would be to study something like dividend yield through time. Remember, the dividend yield is effectively the ‘cash flow’ to a shareholder, but it can fluctuate year-to-year or between payments. Currently, Woolworths Group Ltd shares have a dividend yield of around 4.69%, compared to its 5-year average of 2.92%. Put simply, WOW shares are trading above their historical average dividend yield.
Be careful how you interpret this information though – it could mean that dividends are growing, or it could mean the share price is falling. In the case of WOW, last year’s dividend was greater than the 3-year average, so the dividend has been growing.
The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! Both of these models would be a better way to value the WOW share price.
