
Owning Wesfarmers Ltd (ASX: WES) shares could be a smart choice for investors who want to earn $2,000 (or more) of passive income.
In a rapidly changing world, I think there are a few things that customers will always want – good products at great prices. Wesfarmers can provide that through its two leading businesses, hardware store Bunnings and general retailer Kmart.
Both of those businesses are excellent performers for Wesfarmers with how both of them generate returns on capital (ROC) of around 70%. The parent business Wesfarmers earns a return on equity (ROE) of more than 30%, which is pleasingly high for a retailer.
Bunnings and Kmart continue to invest in themselves and unlock more growth. For example, there are now Anko stores in the Philippines, while in recent-ish times Bunnings acquired Beaumont Tiles and expanded its pet and auto care ranges.
Another significant advantage to Wesfarmers’ operating model is how it’s willing to buy some businesses and sell others. Recent investments include lithium mining and healthcare businesses. In five years, there could be additional names within the Wesfarmers portfolio.
With how the business aims to grow its dividend over time in line with profit and cash flow, the future looks bright for owners of Wesfarmers shares. Let’s see what analysts expect of the company’s dividend for FY27 because that’s the next dividend investors will receive.
FY27 passive income projection
In the 2026 financial year, Wesfarmers grew its annual dividend per share by 7.8% to $2.22.
Analysts expect the company’s dividend could increase again in FY27 after a number of years of consistent growth.
Wesfarmers says that it has a focus on providing shareholders with a satisfactory return to shareholders and a commitment to efficient capital management.
According to the projection on CMC Invest, Wesfarmers is forecast to hike its annual dividend per share by 7.9% to $2.395.
That projection translates into a potential dividend yield of 3% excluding franking credits and 4.3% including franking credits for FY27.
To unlock $2,000 of passive income, an investor would need 836 Wesfarmers shares if we’re just thinking about the dividend cash. Including franking credits as part of the income would mean needing 585 Wesfarmers shares.
Is this a good time to invest in Wesfarmers shares?
I’m not sure that Wesfarmers would ever trade at a truly low price. It’s a high-quality company, with leading retail businesses that are primed to deliver low-cost products, which could be very appealing during economically uncertain times.
According to CMC Invest, there have been 10 broker ratings on the business within the last three months, with four of those ratings being a buy, two being a hold and four being a sell.
If I had to hold one major ASX blue-chip share over the long-term, Wesfarmers would be the one I’d choose because of its ability to adjust its portfolio.
But, other, smaller ASX shares could be even more appealing opportunities.
The post How much must I invest in Wesfarmers shares to earn $2,000 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.

