Woolworths Group Ltd (ASX: WOW) shares have long been a staple in the portfolios of ASX investors, driven by the company's prominent position in the supermarket industry and consistent growth in earnings and dividends. However, in the ever-competitive world of dividend yields, Woolworths finds itself facing the challenge of matching up to competitors, especially Coles Group Ltd (ASX: COL). With Coles currently boasting a yield of 4.15%, Woolworths' 2.85% dividend yield appears modest in comparison.


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The Landscape of Dividend Yields

Woolworths, a household name known for its supermarket dominance, has earned the loyalty of investors over the years. Despite its fully franked dividend, its current yield is noticeably lower compared to other ASX blue chips like the big miners, major banks, Telstra Group Ltd (ASX: TLS), and Woodside Energy Group Ltd (ASX: WDS).


Even Coles, a direct competitor in the retail sector, outshines Woolworths with its present yield of 4.15%. This prompts speculation among Woolworths shareholders, who are likely hoping for a substantial dividend increase in 2024 to remain competitive.


The Historical Dividend Rollercoaster

A closer look at Woolworths' dividend history reveals a somewhat inconsistent track record. Unlike Coles, which has steadily increased its annual dividend since 2019, Woolworths has experienced fluctuations.


- In 2019, Woolworths paid out $1.02 per share.

- By 2020, the dividend dropped to 94 cents a share.

- 2021 witnessed a significant increase, reaching $1.08 per share.

- However, 2022 saw another decline, with dividends at 92 cents per share.


In 2023, Woolworths distributed an April interim dividend of 46 cents per share and a final September dividend of 58 cents per share, totaling $1.04 per share for the year.


The Goldman Sachs Perspective

Enter Goldman Sachs, an ASX broker with a bullish outlook on Woolworths. With a conviction buy rating and a 12-month share price target of $42.40, Goldman Sachs predicts a substantial dividend increase for Woolworths shareholders in the coming years.


For the 2024 financial year, Goldman Sachs anticipates Woolworths to pay out a total of $1.49 per share in dividends, including an April 2024 interim dividend of 91 cents per share. If realized, this would mark the highest dividend payout in Woolworths' history.


But Goldman Sachs doesn't stop there. Looking ahead to FY25, the forecast is even more enticing, with a predicted total of $1.63 in dividends per share.


Awaiting the Future

Woolworths shareholders may find themselves eagerly anticipating the fulfillment of Goldman Sachs' predictions. As the competition in the retail sector remains fierce, the prospect of a significant dividend boost could position Woolworths favorably among investors.


However, the future is uncertain, and these predictions are subject to market dynamics and company performance. As investors eagerly await the unfolding of events, the competitive landscape and Woolworths' dividend strategy will undoubtedly be closely monitored in the coming years.