Do Wesfarmers shares really offer 13% upside AND passive income?

2023 has so far been a good year for the Wesfarmers Ltd (ASX: WES) share price, and it could soon get better if one broker is to be believed.

Morgans is notably hopeful for the company behind iconic retailers like Kmart, Bunnings, Target, and Officeworks, as well as lesser-known businesses including WesCEF and lithium resource Mt Holland.

It’s tipping the stock to grow, and its also hopeful of the company’s dividends.

Right now, the Wesfarmers share price is $49.29. That’s 8.4% higher than it was at the start of 2023.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has risen 7.1% so far this year.

So, what might drive the stock even higher in the future? Let’s take a look.

Could the Wesfarmers share price surpass $55 in 2023?

The ball might be in Wesfarmers’ court in 2023, according to Morgans.

The broker tips the economic environment to soften this year. Meanwhile, many experts are forecasting recessions to hit some of the globe’s largest economies as higher interest rates, employed in a bid to tame inflation, take their toll.

Fortunately, Kmart could be “well-placed to benefit” from such a shift, Morgans says, courtesy of my Fool colleague James. It notes the average price of an item at the department store chain is around $6 to $7.

Wesfarmers managing director and CEO Rob Scott also expressed that the company could be poised to benefit from an economic slowdown at its October annual general meeting, saying:

While there are some risks on the horizon – including elevated inflation, rising interest rates and geopolitical tensions, I continue to believe that Wesfarmers is well positioned for this environment and has the capacity to effectively manage a range of economic scenarios.

Our balance sheet is strong. We have a diverse portfolio of high quality, cash-generative businesses, and new opportunities for value creation.

Morgans tips the Wesfarmers share price to reach $55.60 – a potential 12.75% upside. Meanwhile, the company could work to grow the passive income it offers investors.

The broker forecasts Wesfarmers to pay $1.82 per share in dividends this financial year and $1.89 per share next financial year.

That’s up from $1.80 per share last financial year and could see Wesfarmers boasting a 3.8% dividend yield by financial year 2024, considering its current share price.

Though, not all experts are so positive. Goldman Sachs rates the stock as a sell, slapping it with a $42.20 price target – a potential 14% downside.

The post Do Wesfarmers shares really offer 13% upside AND passive income? 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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended 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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