How is the conglomerate shaping up for income investors?
The post Here’s what the Wesfarmers (ASX:WES) dividend will pay you today appeared first on The Motley Fool Australia. –
Wesfarmers shares are now up 19.24% in 2021 so far, and 31.94% over the past 12 months. That looks pretty good against the ASX 200, which has managed 10.5% and 21.2% over the same periods, respectively.
In fact, just this week, the Wesfarmers share price hit a new all-time high of $61.66. Long story short, it’s been a great share to own in recent times.
But as an ASX 200 blue chip, Wesfarmers is also known as a dividend heavyweight. Not only have Wesfarmers shares consistently paid fully franked dividends over most of the past few decades, but they have also done a pretty good job of delivering dividend increases as well. In 2009, the company paid out $1.10 in dividends per share. But by 2019, this was up to $1.78 (plus a special dividend that year).
These figures don’t reflect the spin-off of Coles Group Ltd (ASX: COL) in late 2018 either. At the time, Wesfarmers shareholders received one Coles share for every Wesfarmers share owned. Since Coles is now a fully-fledged dividend share in its own right today, this would have further added to long-term shareholders’ dividend returns as well.
But enough dwelling on the past, let’s check out what the Wesfarmers dividend has to offer today.
What kind of dividend do Wesfarmers shares pay today?
Ok, let’s go through Wesfarmers’ last two dividends paid to shareholders. The company’s last dividend payment hit investors’ bank accounts on 31 March this year. It was an interim dividend coming in at 88 cents per share, fully franked. This interim dividend was a 17.3% increase from 2020’s interim payout of 75 cents per share.
Before that, October 2020 saw Wesfarmers’ most recent final dividend. This consisted of the ordinary final (and fully franked) payout of 77 cents per share, as well as a special dividend of 18 cents per share (also fully franked).
This special dividend was funded by some of the excess capital Wesfarmers received from the sale of a parcel of Coles shares in 2020. The ordinary final dividend was slightly lower than Wesfarmers’ previous final dividend of 78 cents per share, but not if you include the special dividend, of course.
On yesterday’s closing Wesfarmers share price of $61.42 per share, these two most recent ordinary dividend payments give Wesfarmers a trailing dividend yield of 2.69%. Factoring in Wesfarmers’ full franking on both payouts, and we get a grossed-up yield of 3.84%.
Taking into account the special dividend from last year, we instead get to a trailing yield of 2.98% on yesterday’s closing share price. That figure grosses-up to 4.26% with the full franking.
Will the good times roll for income investors?
But what about the future? Well, one broker who is bullish on Wesfarmers’ income chops is investment bank, Goldman Sachs.
Goldman currently rates Wesfarmers shares as a ‘buy’. But it also estimates that Wesfarmers will be able to keep its dividend rising over 2021 and 2022 to reach $2.08 per share by FY2023.
Shareholders will likely be keeping their fingers crossed it turns out that way.
Should you invest $1,000 in Wesfarmers right now?
Before you consider Wesfarmers, you’ll want to hear this.
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*Returns as of May 24th 2021
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Motley Fool contributor Sebastian Bowen 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 COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.