Wesfarmers shares: A potential source of secondary income

I’m sure we’d all like another source of income to add to our day jobs. And there is no better kind of secondary income than passive income.

Luckily for investors, ASX shares can be a great way to secure a secondary stream of passive income. Dividends from shares are truly passive – requiring zero effort aside from buying the shares themselves. So let’s discuss one ASX 200 blue-chip share that might be a great place to start: Wesfarmers Ltd (ASX: WES).

Wesfarmers is a giant of the ASX. This company has been around since 1914, and today is one of the largest businesses in the country. It boasts ownership of several high-profile retailers, including Target, OfficeWorks, Kmart and its crown jewel, Bunnings:

But Wesfarmers also has stakes in a vast array of other businesses. These include Covalent Lithium, Workwear Group, Priceline Pharmacies and Wesfarmers Chemicals, Energy and Fertilisers.

But let’s get down to how Wesfarmers shares could be a source of secondary, passive income.

How to use Wesfarmers shares for a secondary income

Wesfarmers is a dividend-paying company and has been for decades. However, Wesfarmers’ earnings base can be quite cyclical. Especially so considering this company is more active in the mergers and acquisitions space than most.

It was only in 2018 that Wesfarmers offloaded Coles Group Ltd (ASX: COL) from its portfolio, which substantially changed the company’s dividend profile.

But despite this, Wesfarmers is still a pretty solid long-term income share. In COVID-ravaged 2020, the company managed to fork out $1.70 in fully-franked dividends per share. This rose to $1.78 per share in 2021 and lifted again to $1.80 per share in 2022.

At the current Wesfarmers share price of $49.21 (at the time of writing), those latest dividends give Wesfarmers a trailing yield of 3.66%. That’s 5.23% grossed-up with the full franking.

Some ASX brokers expect Wesfarmers to keep the dividend pay rises coming over the next few years too.

So while Wesfarmers might not have the highest dividend yield on the share market today, it is still undoubtedly a solid dividend share and one that any investor can use to build up a secondary and passive source of income.

The post Wesfarmers shares: A potential source of secondary income appeared first on The Motley Fool Australia.

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More reading

• 2 of the best ASX dividend shares to buy right now: analysts
• Wesfarmers shares: Here are the dividend forecasts for 2023 and 2024
• With almost no investments at 30, can ASX shares still make me rich?
• Is Wesfarmers a ‘safe’ ASX 200 share to buy for dividends?
• Experts say these top ASX dividend shares are buys right now

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.

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