Insights

Could it be time to consider buying Wesfarmers (ASX:WES) shares?

The Aussie conglomerate has been enjoying an outstanding year on the ASX 200
The post Could it be time to consider buying Wesfarmers (ASX:WES) shares? appeared first on The Motley Fool Australia. –

Many investors may currently be contemplating whether the Wesfarmers Ltd (ASX: WES) share price is a buy, with shares in the Australian conglomerate having had an outstanding year thus far.

Since the start of the year, the Wesfarmers share price has surged more than 28% and is currently trading at record highs. In comparison, the broader S&P/ASX 200 Index (ASX: XJO) is only up 14% this year.

At the time of writing, Wesfarmers shares are swapping hands for $65.55 apiece. That’s a gain of 0.21% on yesterday’s closing price.

So, is it too late for investors to consider buying shares in Wesfarmers?

Wesfarmers shares for dividend income

Wesfarmers shares have historically been an attractive source of dividend income for investors.

In FY20, Wesfarmers paid shareholders a final dividend of 77 cents per share. This was in addition to a special dividend of 18 cents.

The conglomerate’s interim dividend for FY21 was booked in at 88 cents per share.

In total, Wesfarmers has paid a total of $1.83 per share over the past 12 months. As a result, some investors may be considering buying Wesfarmers shares for their dividend yield.

More on Wesfarmers

Wesfarmers is a retail conglomerate that operates household banners including Bunnings, Kmart, Officeworks, Target, and online retailer Catch.

As noted earlier, the Wesfarmers share price has had an outstanding year thus far.

With a large proportion of the Australian population being under some form of COVID-19 induced lockdown, the conglomerate could be poised to benefit.

Depending on individual state governments, most of these retail businesses are classified as consumer staples.

The Wesfarmers share price also appears to have been boosted by the company’s renewed strategy. The conglomerate is focused on investing in new growth platforms and selling unwanted assets.

In addition, Wesfarmers’ pursuit of growth was illustrated recently following its  proposed $687 million offer for Australian Pharmaceutical Industries Ltd (ASX: API).

Outlook for the Wesfarmers share price

In terms of what to expect from the Wesfarmers share price moving forward, the company’s upcoming earnings for FY21 could potentially provide some insights.

According to a recent note from Goldman Sachs, analysts are expecting Wesfarmers to report full-year revenue of $34,132.1 million. This implies an increase of 10.7% compared to the prior corresponding period.

Analysts also expect earnings before interest and tax (EBIT) to be 9.6% higher than FY20 at $3,508 million. The broker also predicts strong earnings will see the conglomerate declare a full-year dividend of $1.84 per share.

Wesfarmers is scheduled to report its earnings on Friday 27 August.

When deciding on the right time to invest in a company, recent performance, earnings updates, broker commentary and competitor activity can all provide useful insights. At the end of the day, however, each individual investor’s circumstances, financial goals and risk appetite will help determine an investment’s suitability. 

The post Could it be time to consider buying Wesfarmers (ASX:WES) shares? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Wesfarmers right now?

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Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Wesfarmers wasn’t one of them.

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More reading

ASX 200 Weekly Wrap: New records just keep coming for the ASX 200

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2 ASX 200 shares that could offer good dividend income

Wesfarmers (ASX:WES) share price rises amid latest digital push

Motley Fool contributor Nikhil Gangaram 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 owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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