Do Wesfarmers shares really offer 22% upside AND growing dividends?

Those invested in Wesfarmers Ltd (ASX: WES) shares, rejoice! One broker has tipped the stock to grow another 22% in the near future, while the company is expected to up its dividends.

That’s likely uplifting news for potentially downtrodden investors.

The Wesfarmers share price has suffered a major tumble in 2022, falling 24% year to date to trade at $45.44 today.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has dumped 9% so far this year.

So, why is Aussie broker Morgans bullish on Wesfarmers shares? Keep reading to find out.

Wesfarmers shares tipped to gain 22% amid rising dividends

The Wesfarmers share price could regain 22% on the back of the company’s retail businesses, management team, and balance sheet, according to Morgans.

The broker recently said Wesfarmers holds “one of the highest quality retail portfolios in Australia”. Its behind the likes of Bunnings, Kmart, Target, Catch.com.au, and Priceline.

It had a $4.3 billion net debt position at the end of financial year 2022 – down from a $109 million net cash position at the end of the prior year.

Though, the drop was largely due to a $2.3 billion capital return and the $1.9 billion of fully franked dividends handed to investors over the period.

Speaking of dividends, Wesfarmers has offered investors $1.80 per share in dividends over the last 12 months, leaving it trading with a 4% yield.

The broker tips its payouts to increase to $1.82 this financial year and to $1.89 next financial year, my Fool colleague James reports.

That would see the share trading with yields of 4% and 4.2% respectively, considering its current share price.

However, Morgans also thinks the Wesfarmers share price could lift to $55.60 – representing a potential 22.4% upside.

At that price, its forecasted dividends would see it with a 3.3% yield this financial year and a 3.4% yield next financial year.

The post Do Wesfarmers shares really offer 22% upside AND growing dividends? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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 positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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