These 2 ASX Dividend Stocks Could Raise Payout Soon

For many Australian investors, dividends aren’t just an added perk—they’re often the main reason for holding certain stocks. Regular, reliable income can be the backbone of a portfolio, and when payouts are set to rise, it naturally sparks excitement. In today’s market, two companies stand out for their potential to reward shareholders with higher dividends in the near future: Woodside Energy (ASX: WDS) and New Hope Corporation (ASX: NHC).

Both businesses are generating strong cash flows, have manageable payout ratios, and maintain solid balance sheets. These ingredients often pave the way for dividend growth. Let’s take a closer look at their latest results and why they might be primed to lift distributions.

Woodside Energy: Strong Half-Year, Top-End Payouts, and De-Risking Projects

Woodside Energy is Australia’s largest listed oil and gas company, and it recently delivered a robust set of half-year (H1 FY25) results. Despite a mixed backdrop for energy prices, the company’s operations and disciplined cost management supported healthy earnings and an attractive interim dividend.

Financial Performance

• Revenue: $10.37 billion in H1 FY25, up 14% year-on-year.
• Net Profit After Tax (NPAT): $2.07 billion.
• Costs: Unit production costs fell, which helped to protect margins even as oil and gas prices fluctuated.

This performance highlights Woodside’s ability to generate reliable profits, even in a volatile commodity market.

Dividend Policy in Action

Woodside declared a fully franked interim dividend of 53 US cents per share (around $0.82–$0.86 depending on exchange rates). This represents an 80% payout ratio of underlying NPAT—right at the top end of the company’s dividend framework, which promises a minimum payout of 50%.

Importantly, the Dividend Reinvestment Plan (DRP) remains suspended, which means shareholders receive full cash dividends rather than stock.

Why Dividends Could Lift Further

The fact that Woodside has already paid out 80% of its profits shows clear confidence in its cash generation ability. Looking ahead, several factors support the possibility of continued or even higher distributions:

• Project De-Risking: Major growth projects, such as Scarborough in Australia and Trion in Mexico, are advancing steadily. Successful execution reduces future uncertainty and strengthens free cash flow visibility.
• Strong Balance Sheet: Liquidity remains healthy, giving Woodside flexibility to either increase dividends or return capital through buybacks.
• Commodity Prices: If oil and gas prices hold steady or trend higher into the second half of FY25, free cash flow could rise further.

All of this suggests that Woodside is well positioned to maintain its high payout ratio, and if conditions improve, investors might even see additional capital returns layered on top.

New Hope Corporation: Resilient Cash Flows, Strong Margins, and DRP Flexibility

Coal producer New Hope Corporation has also proven it can deliver for shareholders, even as coal prices came off their peaks. The company’s latest results demonstrate resilience, cost discipline, and an emphasis on returning cash to investors.

Financial Performance

• Revenue: $1.01 billion in H1 FY25.
• EBITDA: $496.40 million.
• NPAT: $340.31 million.
• Operating Cash Flow: $316.89 million.

Despite lower coal prices, New Hope maintained solid earnings thanks to higher production and cost reductions. This underlines the company’s ability to weather commodity cycles.

Dividends and Capital Management

The Board declared a fully franked final dividend of 15 cents per share, bringing total FY25 dividends to 34 cents per share. While slightly lower than the 41 cents paid previously (mainly due to timing effects), the yield still compares very favorably to many other ASX-listed companies.

Another important development was the introduction of a Dividend Reinvestment Plan (DRP). This gives shareholders the option to reinvest their dividends into new shares, allowing New Hope to preserve cash while still rewarding investors.

Additionally, the company continued its on-market buyback program, repurchasing shares at an average price of about AU$3.60 per share. This effectively boosts returns for remaining shareholders.

Why Dividends Could Lift Further

Several factors point to potential upside in New Hope’s distributions:

1. Cash Balance: With strong cash reserves, the company has the flexibility to pay more if conditions improve.
2. Stable Operations: Higher production and lower costs provide a buffer, ensuring earnings remain covered.
3. Dual Capital Return Strategy: Between dividends, the DRP, and buybacks, New Hope has multiple levers to deliver value to investors.

If coal prices stabilise and cost discipline continues, the company could easily afford to raise its ordinary dividend from this year’s reset level or expand its buyback program.

What Investors Should Watch

While both companies appear positioned for strong shareholder returns, it’s important to keep an eye on the variables that influence their payout decisions.

For Woodside

Oil and Gas Prices: Sustained higher prices would drive stronger free cash flow.

Project Milestones: Scarborough and Trion construction updates will be key indicators of long-term capacity.

Capital Management Signals: End-of-year guidance could hint at buybacks or special dividends.

For New Hope

Coal Prices: Stability here will be critical for earnings.

Logistics and Weather Risks: These can impact production volumes and costs.

Dividend Reinvestment Plan Uptake: How many shareholders reinvest versus take cash will affect the company’s cash position.

Key Risks to Keep in Mind

1. Woodside: Energy price volatility, delays or overruns in project construction, and foreign exchange fluctuations could all reduce distributable cash.
2. New Hope: Coal price swings, regulatory changes, or disruptions to supply chains could weigh on profitability and payouts.

The Bottom Line

Woodside Energy and New Hope Corporation both stand out as dividend stocks to watch on the ASX right now. Woodside’s strong half-year results, top-end payout ratio, and de-risking of major projects suggest dividends could remain elevated or even grow if market conditions improve. Meanwhile, New Hope’s resilient earnings, healthy cash flow, and flexible approach through dividends, buybacks, and its new DRP put it in a strong position to continue rewarding shareholders.

For income-focused investors, these two companies deserve a close look. While commodity price cycles always carry risk, both Woodside and New Hope are demonstrating the financial strength and shareholder-friendly policies that often translate into rising dividends.

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