Wesfarmers Ltd (ASX: WES) shares are an excellent option for Australians seeking passive income. It’s such a solid business that I’d rather invest in it than receive the Age Pension.
Wesfarmers is the company that owns various businesses such as Bunnings, Kmart, Officeworks, Priceline, Target, a chemicals, energy and fertiliser business called WesCEF and other healthcare businesses (such as InstantScripts).
Australia’s Age Pension is one of the most generous in the world. The maximum per fortnight that a single person can receive was recently hiked to $1,237.70 per person.
For me, there are two key reasons why I’d prefer Wesfarmers shares to the Age Pension.
The payout is growing faster than inflation
The Age Pension is regularly growing over time, with inflation playing a key role in how fast it increases.
However, the Wesfarmers dividend is growing faster. Therefore, my cash flow could steadily improve beyond the Age Pension if I started with the same income.
In FY26 â the financial year that finished in June 2026 â Wesfarmers’ board decided to hike its annual dividend per share by 7.8% to $2.22. That payout growth rate was significantly more than the inflation rate.
Its dividend is projected to increase again in FY27. According to Commsec’s forecast, the business is expected to grow its payout by 5.5% in FY27, 6.5% in FY28, and 8.8% in FY29.
Of course, projections are not guaranteed future payments.
Potential for a rising Wesfarmers share price
Another reason I prefer this ASX dividend share is its potential for capital growth. I think it’s a good thing to have a strong asset base.
In the past four years, it has risen by 70%, at the time of writing. Past performance is not a guarantee of future returns.
The business has proven that its main businesses are excellent at growing their earnings. In FY26 alone, Bunnings Group (which includes Beaumont Tiles) grew earnings by 5.1%, and Kmart Group grew earnings by 6%. WesCEF grew earnings by 18.5%, but it’s significantly smaller than Bunnings and Kmart.
In my view, for two retailers to deliver solid growth in a difficult retail environment is really impressive.
Both Bunnings and Kmart achieve returns on equity (ROC) of close to 70%, while Wesfarmers’ overall return on equity (ROE) was 35.5%. The company achieves enormous returns on money invested in certain areas of the business, which, to me, is a stronger indicator that future internal investments can help profit grow.
Over the long-term, profit growth is the best driver for the Wesfarmers share price, so I’d say this business is a solid ‘compounder‘ option.
How many shares it’d take to match the Age Pension
I’m going to focus on the FY27 payout, given that investors have already received the FY26 dividend.
The business is projected to pay an annual dividend per share of $2.34 in FY27. The maximum Age Pension currently annualises to an approximate total of $32,180.
If we exclude franking credits from the income goal, it’d take 13,753 Wesfarmers shares. Including franking credits, it would take 9,627 Wesfarmers shares to match the Age Pension.
But, I wouldn’t suggest putting someone’s entire investment portfolio into one business. I’d include other quality ASX shares as well.
The post 9,627 shares of Wesfarmers pay an income equal to the Age Pension appeared first on The Motley Fool Australia.
Should you invest $1,000 in Wesfarmers right now?
Before you buy Wesfarmers shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Wesfarmers wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 1 August 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- Wesfarmers vs Qantas: Which ASX share suits a 60-year-old investor?
- Wesfarmers vs Coles: Which dividend share is better for retirees?
- Why this top broker is buying Charter Hall, Soul Patts, and Wesfarmers shares
- Down 20%: Is the Wesfarmers share price a top buy?
- How much passive income can I earn from a $950,000 superannuation balance?
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.