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Highlights:
- After a tough October, Woodside’s share price rose 3.1% in November, outperforming its previous performance and showing resilience.
- Despite global oil prices remaining steady, Woodside faced challenges in 2024, with oil prices starting the year above US$90 per barrel and ending November below US$73 per barrel.
Woodside Energy Group Ltd (ASX:WDS), one of Australia’s leading oil and gas companies, ended November with a modest 3.1% rise in its share price, following a 5.6% drop in October. While the stock still lagged behind the benchmark S&P/ASX 200 Index, which posted a 3.8% gain for the month, the positive turn in Woodside’s performance in November has led some investors to wonder whether a rebound is on the horizon.
Woodside shares closed November at A$24.51, a slight increase from A$23.78 at the end of October. However, despite this recent recovery, the company’s share price is down by 21% year-to-date as global oil prices remained relatively stagnant, preventing a stronger recovery in the stock price.
Global Oil Market Challenges and Woodside's Performance
Despite a steady performance in the global oil market, with Brent crude hovering just above US$70 per barrel throughout November, Woodside faced significant headwinds in 2024. Earlier in the year, Brent crude was trading above US$91 per barrel, and the slowdown in oil prices has contributed to Woodside’s underperformance this year.
However, as oil prices held steady, there was a potential boost for the stock in November. Investors might have been responding positively to the results of the US presidential election, as a potential return of Donald Trump to the White House in 2025 is seen as favorable for the oil and gas sector. Trump’s more supportive stance on the industry, in contrast to the Biden administration's policies, has led to growing optimism regarding oil price increases in the future.
Additionally, Woodside, led by CEO Meg O'Neill, has expanded its operations in the US with a substantial investment of $30 billion in North America over the past two years. As tensions surrounding global conflicts, particularly the war in Israel and involvement in the Middle East, continue to unfold, investors are pricing in the possibility of oil supply disruptions that could lead to higher oil prices in 2025.
Dividends and Positive Forecasts
In addition to the stable oil market, Woodside’s strong dividend payouts have provided support for the stock. Over the past 12 months, Woodside has paid out a total of A$1.937 per share in fully franked dividends, giving the stock a trailing dividend yield of 7.8%. This attractive dividend yield, paired with the company’s solid fundamentals, has helped maintain investor interest even amid the challenges faced by the energy sector in 2024.
Looking ahead, analysts are optimistic about Woodside’s future prospects. A report from Morgans in late November highlighted Woodside as the best energy stock to buy within the ASX 200, noting that the stock’s price currently reflects a near-cycle-low oil price level, despite the company’s strong growth profile and solid financial health. Morgans issued a $33.00 price target for the stock, representing a potential upside of almost 36% from its current trading level. This potential upside, coupled with continued dividend payouts, makes Woodside an appealing investment for many.
Conclusion
Woodside Energy has managed to shake off its losing streak in November, ending the month with a positive performance despite challenges in the global oil market. Although its share price remains down for the year, the company’s strong dividend yield and potential tailwinds from a future rise in oil prices could lead to a rebound in 2025. Analysts are optimistic, with a potential 36% upside forecast for the stock, making Woodside a notable pick for investors looking to capitalize on future growth in the energy sector.
