The Wesfarmers Ltd (ASX: WES) share price has slipped 9% since 13 September.
Shares in the diversified S&P/ASX 200 Index (ASX: XJO) retail company are currently trading for $44.26 each, 0.55% higher than yesterday’s closing price. But the Wesfarmers share price remains down 26% in 2022.
Wesfarmers’ subsidiaries include household names like Bunnings Warehouse, Kmart Australia, Officeworks, and Covalent Lithium.
And the company is well-known for its reliable dividend payments. It traditionally makes two fully-franked dividend payments to shareholders each year, generally paid out in March and October.
Despite the Wesfarmers share price taking a hit (alongside almost every stock on the ASX 200) during the early months of the pandemic in 2020, the company still made both dividend payouts.
Wesfarmers also offers a dividend reinvestment plan (DRP).
This year the company paid out 80 cents in dividends on 30 March and $1.00 on 6 October.
At the current share price, that works out to a trailing dividend yield of 4.1%.
Which brings us back to the question…
Is the retail giant now a bargain for its dividend payments?
According to analysts at Morgans, the answer looks to be a solid ‘yes’.
Morgans believes Wesfarmers is well positioned to grow over the coming years, with a “highly regarded management team” and “quality retail portfolio”.
Morgans has an add rating on the stock and a $55.60 target for the Wesfarmers share price.
That’s 26% higher than the current share price, meaning Morgans sees potential capital gains alongside a reliable dividend stream.
As for that dividend stream, the analysts forecast dividend payouts of $1.82 in FY23, with dividends edging up to $1.89 in FY24.
That works out to fully franked yields of 4.1% in the current financial year and 4.3% the following year.
How has the Wesfarmers share price performed longer-term?
Over the past five years, the Wesfarmers share price has gained 46%. And that doesn’t include the twice-yearly dividend payouts.
By comparison, the ASX 200 is up 14% over that same period.
The post Down 9% in a month, is the Wesfarmers share price a bargain buy for dividends? appeared first on The Motley Fool Australia.
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More reading
- Morgans names 2 ASX 200 blue chip shares to buy
- What’s driving the Wesfarmers share price on Tuesday?
- Could ASX 200 shares represent a ‘phenomenal opportunity’ right now?
- What’s the outlook for ASX dividend shares for the rest of 2022?
- Can you buy Bunnings Warehouse shares on the ASX?
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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 Wesfarmers Limited. 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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