Here's the dividend forecast out to 2028 for Woolworths shares

Woolworths Group Ltd (ASX: WOW) shares could be an increasingly compelling pick for dividends over the next few years.

Woolworths is best known for its supermarket business in Australia – it's the biggest operator in the country.

But, it owns a number of other businesses including the New Zealand supermarket Countdown, the business food supplier PFD, BIG W, Petstock and more. It's better diversified than some investors may think it is.

After everything that has happened over the last few years, it's good to look at the potential dividend income from the ASX defensive share. The company may be able to provide steadily rising payouts for investors.

FY26

The 2026 financial year has already finished, but we haven't yet seen the FY26 result or the annual/final dividend.

The latest update we have from the business is the FY26 third-quarter update. Total third-quarter sales were up 4.5% to $18.1 billion. Within that, Australian food grew sales by 5.9% to $13.8 billion, Australian business-to-business (B2B) sales grew 4.9%, New Zealand food increased 1.4% in New Zealand dollar terms and 'W Living' sales rose 4.8%.

Sales growth does not automatically turn into profit growth because it depends on what's happening with the profit margin. Woolworths' margins will be revealed with the full-year result next month.

Underlying earnings growth can turn into a rising dividend, whether that's this year or next year.

In the FY26 half-year result, the company grew its interim dividend by 15.4% to 45 cents per share. The projection on Commsec suggests the business could hike its annual dividend per share to 99.5 cents per share in FY26.

At the time of writing, that translates into a grossed-up dividend yield of 3.6%, including franking credits.

FY27

We're already in the 2027 financial year, and investors won't have too long to wait until the next dividends come along.

Woolworths continues to work on becoming more efficient and resilient, while providing customers with "lower prices, better experiences and greater convenience", according to the Woolworths CEO Amanda Bardwell.

It'll be interesting to see how much Woolworths can grow its earnings in FY27, following the Middle East disruption. In FY26, its Australian food operating earnings (EBIT) growth is expected to be in the "mid to high single-digit range".

The projection on Commsec suggests Woolworths' earnings per share (EPS) and dividend per share could both rise by more than 10%.

The FY27 dividend per share is forecast to increase to $1.13, translating to a grossed-up dividend yield of 4.1%, including franking credits.

FY28

The 2028 financial year dividend could increase by more than 10% again in the 2028 financial year.

The FY28 payout could translate into a grossed-up dividend yield of 4.7%, including franking credits. If the company's dividend does increase to that level, then it'll be a fairly compelling pick for passive income.

But, investors may be looking for investments that can grow earnings even faster than what Woolworths can deliver.

The post Here's the dividend forecast out to 2028 for Woolworths shares appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026