WDS continues to languish down over 21% year-to-date, with many investors trying to pick the bottom. There have been no real surprises from WDS operationally in 2024; the metrics are solid, but as oil and gas prices struggle, it’s tough for the producer to gain traction. We regard WDS as a cyclical play on the oil price into 2025, and as we’ve witnessed a few times in 2024, buying spikes to new lows have at least led to a bounce, albeit not a sustained one.
NB For yield-conscious investors, WDS is forecast to pay a 60c fully franked dividend in February.
- We expect WDS to continue paying out 80% of profits, delivering a 2024 dividend yield of 7.9%. However, with large CAPEX bills on the horizon, the yield will likely fall toward 4.5% by 2026.
- The risk/reward toward WDS will start to look attractive if we see another washout to fresh 2024 lows, though we would view this as a trade only.
MM is cautiously bullish WDS below $23
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