Wesfarmers Ltd (ASX: WES) shares could be among the best options for dividends from an ASX blue-chip share.
One of the main reasons to like the company is its high-quality businesses, such as Bunnings, Kmart, Officeworks, WesCEF (chemicals, energy and fertilisers), and Priceline.
The company’s profitability metrics really show how effective it is at making money.
In FY26, Wesfarmers reported a return on equity (ROE) of 35.5%, representing a 1.2 percentage point increase compared to FY25. Excluding significant items, it was a 4.3 percentage point rise for the ROE.
The return on capital (ROC) for its two key businesses is truly impressive. In FY26, Bunnings Group delivered a ROC of 69.2%, while Kmart Group’s ROC was 68.3%.
Most businesses would love to achieve an ROC close to 70%, and that’s exactly what the company delivers.
FY26 was a solid year for the company, with underlying earnings per share (EPS) climbing 8.3% and the dividend per Wesfarmers share being hiked by 7.8% to $2.22.
Let’s take a look at what analysts think could happen with the company’s dividend.
FY27 dividend projection
Wesfarmers is forecast to deliver a higher dividend for investors, partly based on the view that earnings could climb in FY27.
According to the projection on CMC Invest, the company is estimated to grow its annual dividend per share by 7.9% to $2.395. I don’t think many ASX blue-chip shares will increase their payout by 8% or more in the 2027 financial year.
If Wesfarmers does pay a dividend of that level in FY27, it would mean a grossed-up dividend yield of 4.6%, including franking credits, at the time of writing. That’s not the biggest dividend yield in the world, but the company could continue to deliver impressive dividend growth in the years ahead.
The estimate on CMC Invest suggests the business could then hike its annual dividend per share by another 6.7% in FY28.
How many Wesfarmers shares would it take to generate $8,000 of passive income?
If the business does pay $2.395 of dividend cash per Wesfarmers share in FY27, an investor would require 3,341 Wesfarmers shares to make $8,000 of passive income in FY27.
However, the above figure doesn’t include franking credits. If we include franking credits, it would take only 2,339 Wesfarmers shares to generate that much passive income in the 2027 financial year.
The post How many Wesfarmers shares do I need to buy for $8,000 of passive income? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison 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 Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.