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Why I would buy Wesfarmers (ASX:WES) and this ASX dividend share

Here’s why I would buy Wesfarmers Ltd (ASX:WES) and this ASX dividend share for income in this low interest rate environment…
The post Why I would buy Wesfarmers (ASX:WES) and this ASX dividend share appeared first on Motley Fool Australia. –

retail shares wesfarmers

I continue to believe that dividend shares are the best way for investors to generate an income in the current environment.

Luckily, there are a good number for investors to choose from on the Australian share market right now.

Two that I think would be great options for income investors are listed below. Here’s why I would buy them:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share to consider buying is Accent. This footwear-focused retailer was a positive performer in FY 2020 despite the pandemic. It delivered a full year net profit after tax of $58 million, up 7.5% year on year. Thanks to its very strong start to FY 2021, I’m optimistic it will record similar growth this year.

Looking further ahead, I expect its expansion plans, strong online business, and on trend offering to underpin solid earnings and dividend growth over the next decade. In the meantime, I’m forecasting a 9 cents per share fully franked dividend in FY 2021. Based on the current Accent share price, this equates to a 5.7% dividend yield.

Wesfarmers Ltd (ASX: WES)

Another ASX dividend share to consider buying Wesfarmers. I believe the conglomerate is well-placed for growth over the coming years thanks to the quality of its portfolio and particularly its Bunnings business. The hardware giant is now the company’s biggest contributor to earnings. Which, given its strong performance during the pandemic, has proven to be a very good thing.

While there is a lot of uncertainty because of the crisis, I’m optimistic that government stimulus will support the home improvement market and allow Bunnings to maintain its positive form in FY 2021. All in all, I expect this to lead to the company paying a fully franked dividend of ~$1.50 per share in FY 2021. Based on the current Wesfarmers share price, this equates to an attractive fully franked 3.3% dividend yield.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why I would buy Wesfarmers (ASX:WES) and this ASX dividend share appeared first on Motley Fool Australia.

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