3 reasons to buy Wesfarmers shares before 2023

We’re fast running down the clock on 2022, and what a year it has been for ASX investors. Rising interest rates, decades-high inflation figures, and the S&P/ASX 200 Index (ASX: XJO) falling by more than 5.5% (on today’s numbers) have all made 2022 rather memorable.

But let’s talk about Wesfarmers Ltd (ASX: WES) shares, and whether you should buy them before 2023.

3 reasons to buy Wesfarmers shares for 2023

Diversification

So Wesfarmers is the giant industrial and retail conglomerate behind well-known brands like Bunnings, OfficeWorks, Kmart and Target. The company owns a bevvy of other small businesses across a wide range of industries, including resources, manufacturing and energy.

But the company’s retailing businesses deliver the lion’s share of Wesfarmers’ earning base. Even so, Wesfarmers’ top-notch retailers, together with its other interests, make it one of the most diversified ASX 200 blue chip shares on the share market.

Dividends

Wesfarmers has a long and strong history of paying fully franked dividends to its shareholders, making it an appealing ASX share for 2023, in my opinion. Dividends provide cash flow to investors, as well as added returns and a potential inflation hedge.

There are also the tax benefits of the full franking credits that Wesfarmers typically attaches to its dividends too. On recent pricing, the shares are offering a fully-franked yield of 3.9%.

I think that’s a compelling yield to consider today, especially since Wesfarmers raised its dividends from $1.70 per share in 2021 to $1.78 per share in 2022.

Darn good returns from Wesfarmers shares

Quite simply, Wesfarmers is an ASX 200 share that has consistently delivered top-tier returns to investors over decades, as you can see below:

Earlier this year, my Fool colleague Aaron calculated that if an investor bought $10,000 worth of Wesfarmers shares back in early 2012, they would be sitting on an investment worth approximately $43,949 by March 2022.

That figure assumes our investor has received all Wesfarmers dividends, as well as the shares and subsequent dividends of Coles Group Ltd (ASX: COL) that Wesfarmers investors received back in 2018 when the company kicked Coles out of its nest.

Now Wesfarmers has lost some skin in 2022, falling (on today’s pricing) by more than 23% since the start of the year. But the evidence still speaks for itself that Wesfarmers has been a long-term winner for ASX investors. I don’t see why this won’t continue for the next decade.

The post 3 reasons to buy Wesfarmers shares before 2023 appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Forget gold! Start hunting fallen ASX 200 shares to buy for an earlier retirement
• 10 ASX shares I think are buys for 2023
• Stock market correction: How I’m using this opportunity to build wealth with ASX shares
• Guess which ASX 200 share turned a $10,000 investment into $40,000 in 2022
• Don’t try to predict where ASX shares go in 2023, do this instead: Scott Phillips

Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. 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 Coles Group and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/uthLnQd