Fortescue vs Wesfarmers shares: Which is better for passive income?

Weighing up Fortescue Ltd (ASX: FMG) and Wesfarmers Ltd (ASX: WES) shares is a classic fork in the road for Aussie investors hunting for passive income. Both are giants of the ASX and reliable dividend payers—but that’s about where the similarities end. With one rooted in iron ore and the other sprawling across retail, energy, and healthcare, the choice between Fortescue and Wesfarmers shares could shape the nature of your dividend stream and the risk in your portfolio. Here’s how they stack up for those of us keen on generating income from our investments.

The case for Fortescue

Fortescue is one of the world’s largest iron ore producers, operating huge mines and infrastructure assets in the Pilbara region of Western Australia. Since getting its ASX start in 1987, Fortescue has built a global reputation for exporting iron ore, with expansion into integrated infrastructure like heavy haul rail and port facilities. This scale makes it a powerhouse among miners.

What stands out for Fortescue is its juicy dividend—boasting a market-leading fully franked yield of 6.46%, if you take the most current snapshot. Dividends have historically been consistent, fully franked, and generous, with recent payments including $0.62 interim and $0.46 final dividends (all at 100% franking). The company’s P/E ratio of 12.81 suggests the market isn’t pricing in runaway growth, but that’s typical for resources—what Fortescue delivers is strong cash flow, fuelling those dividends. Bear in mind, though, the shares are down 19.1% in 2026 year to date, reflecting the ups and downs tied to iron ore prices.

The case for Wesfarmers

Wesfarmers is Australia’s quintessential conglomerate, with interests spanning Bunnings Warehouse (the hardware titan), Kmart and Target, Officeworks, Priceline (health and pharmacy), plus chemicals and fertilisers. Since its origins as a farmers’ co-op, Wesfarmers has become a fixture in many Aussie portfolios—appreciated for its diversification and steady management.

Dividend lovers take comfort in Wesfarmers’ consistent and long history of payments, also at 100% franking. Its current yield sits at 3.05%, which is solid but less than half that of Fortescue’s on paper. Recent dividends include $1.02 interim and $1.20 final declared for 2026, also fully franked. The P/E, at 28.71, is much higher than Fortescue’s—a function of its diversified earnings and the stability the conglomerate offers. Shares are down 7.6% year to date in 2026, which is less than the slide seen at Fortescue.

Valuation comparison

With both companies sitting among the ASX’s top names, their market caps are hefty: Wesfarmers at $83.20 billion and Fortescue at $51.57 billion. But the numbers that shine for income investors are dividend yield, P/E, and franking. Here’s a quick look:

Metric	Fortescue	Wesfarmers
Market Cap	$51.57 billion	$83.20 billion
P/E Ratio	12.81	28.71
Dividend Yield	6.46%	3.05%
Dividend Franking	100%	100%
Earnings Per Share	0.931	2.534
Dividend Per Share	1.08	2.22

Note: Wesfarmers’ P/E ratio is much higher than Fortescue’s, reflecting its diversified and arguably more stable business mix. Both companies offer 100% franking, so the tax advantage is even.

Recent share price performance

Looking at how the shares have moved recently can highlight sentiment and risk. Comparing the period of 25 August to 22 September 2026:

• Fortescue shares slid 19.1% year to date and experienced periods of volatility over the past month, with swings both up and down. Standouts include a sharp 4.6% dip on 2 September and several other days with moves over 2%—reminding us that resources stocks are always at the market’s mercy when it comes to commodity prices.
• Wesfarmers shares are down just 7.6% over the same period in 2026. The volatility has been notably less wild than Fortescue, with changes mostly under 1% for most days. The steepest daily move was -4.6% on 27 August, but otherwise Wesfarmers’ price chart is a much gentler ride.

Which is the better buy?

If my main goal is passive income, my pick would be Fortescue. That 6.46% fully franked yield, backed by a long streak of generous dividend payments, is hard to overlook if dividend flow is my top priority. Yes, there’s a trade-off—the ride can be bumpy, and much depends on iron ore prices. Investors in Fortescue need to accept that resource shares will always be at the mercy of the commodity cycle.

Wesfarmers, by comparison, offers stability and sector diversification, but at a much steeper P/E and with only half the yield. If I were after more defensive exposure and lower share price swings, I’d lean toward Wesfarmers—but my dividends would be notably smaller, at least for now.

For pure passive income, Fortescue takes the cake for me. But as always, diversification and risk appetite matter—so it’s worth thinking about how either of these fits within your own portfolio goals.

The post Fortescue vs Wesfarmers: Which ASX share is better for passive income in 2026? appeared first on The Motley Fool Australia.

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• Super Retail Group vs Wesfarmers: Dividend showdown for Aussie investors
• What do brokers tip for Fortescue shares over the next 12 months?
• Could Wesfarmers shares reach $100 in 2027

Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

It was a rather depressing end to the trading week for the Australian share market this Friday. After opening sharply lower this morning, the S&P/ASX 200 Index (ASX: XJO) stayed in red territory all day, closing with a 0.43% loss. That leaves the index at a flat 8,665 points as we head into the weekend.

This sad end to the local trading week for ASX investors comes after a more nuanced night of trading over on Wall Street.

The Dow Jones Industrial Average Index (DJX: .DJI) was in a bad mood, losing 0.31% of its value.

However, the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) managed to hold its own, rising a slight 0.012%.

Let’s get back to ASX shares now though and take a closer look at how the various ASX sectors traversed today’s tough trading conditions.

Winners and losers

There were only a couple of sectors that held their value this Friday. But first, let’s get to the far more numerous red sectors.

Leading said losers this session were tech shares. The S&P/ASX 200 Information Technology Index (ASX: XIJ) had a rough one, tanking by 1.66%.

Consumer discretionary stocks were in the firing line today too, with the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) plunging 1.36%.

Joining them were utilities shares. The S&P/ASX 200 Utilities Index (ASX: XUJ) cratered 1.25% today.

Industrial stocks were also on the nose, as you can see from the S&P/ASX 200 Industrials Index (ASX: XNJ)’s 0.87% dive.

Mining shares had a day to forget as well. The S&P/ASX 200 Materials Index (ASX: XMJ) suffered a 0.84% swing against it this Friday.

Healthcare stocks didn’t live up to their name this session, with the S&P/ASX 200 Healthcare Index (ASX: XHJ) shedding 0.79% of its total.

Communications shares matched that result. The S&P/ASX 200 Communication Services Index (ASX: XTJ) gave up 0.79% as well.

Gold stocks were no safe haven, evidenced by the All Ordinaries Gold Index (ASX: XGD)’s 0.48% tumble.

Real estate investment trusts (REITs) weren’t much better. The S&P/ASX 200 A-REIT Index (ASX: XPJ) ended the day down 0.33%.

Even energy shares weren’t spared, with the S&P/ASX 200 Energy Index (ASX: XEJ) dipping 0.3%.

That’s it for the red sectors though, so let’s get to the good stuff.

Leading the winners this Friday were consumer staples stocks. The S&P/ASX 200 Consumer Staples Index (ASX: XSJ) was a harbour in the storm, shooting 0.73% higher.

Finally, the other sheltered corner of the market was financial shares, illustrated by the S&P/ASX 200 Financials Index (ASX: XFJ)’s 0.27% jump.

Top 10 ASX 200 shares countdown

Defence stock Electro Optic Systems Holdings Ltd (ASX: EOS) took out this Friday’s top index spot. Electro Optic Systems shares surged 5.995 hgiher today to finish the week at $11.32 each.

This big leap came after the company announced a new procurement for one of its weapons systems.

Here’s the rest of today’s best:

ASX-listed company	Share price	Price change
Electro Optic Systems Holdings Ltd (ASX: EOS)	$11.32	5.99%
Block Inc (ASX: XYZ)	$108.33	2.08%
Develop Global Ltd (ASX: DVP)	$5.32	2.11%
Auckland International Airport Ltd (ASX: AIA)	$6.87	1.93%
Genesis Minerals Ltd (ASX: GMD)	$7.65	1.19%
A2 Milk Company Ltd (ASX: A2M)	$6.65	1.22%
Coles Group Ltd (ASX: COL)	$23.19	1.27%
Karoon Energy Ltd (ASX: KAR)	$1.79	1.13%
Resolute Mining Ltd (ASX: RSG)	$1.22	1.67%
Ansell Ltd (ASX: ANN)	$44.21	1.14%

Enjoy the weekend!

Our top 10 shares countdown is a recurring end-of-day summary that shows which companies made big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Block and Electro Optic Systems. The Motley Fool Australia has recommended Ansell. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I won’t pretend to be an impartial observer tonight.

My Roosters are playing the Dolphins in the NRL preliminary final, with a place in next weekend’s Grand Final on the line.

I want them to win. Preferably by enough that I can enjoy the last ten minutes.

And should the unthinkable happen, I’ll still be a Roosters supporter tomorrow. I’m not about to change teams because somebody else had a better night.

With the AFL Grand Final tomorrow, I’m hardly alone in getting a little bit carried away this weekend.

That’s part of being a footy fan.

But it can be a pretty ordinary way to be an investor. (It infects our policy conversations, too, but that’s a whole other rant!)

Now, before you think I’ve suddenly abandoned long-term investing, let me explain.

I remain devoted to buying good businesses, at sensible prices, and giving them time to deliver.

But there’s a difference between giving a business time and giving it an unlimited supply of excuses.

Between patience and denial.

Between owning shares and wearing the jersey (or guernsey, if you’re in our nation’s south or west).

Imagine two football clubs having disappointing seasons.

One has a young squad, a sensible development plan and players who are getting better. The results aren’t there yet, but you can see what the club is building.

The other keeps promising that next year will be different, while making the same mistakes.

Both might call it a rebuilding year.

Only one has given you a reason to believe it.

And that’s where our footy analogy helps. I bet if you’re a football fan, you’re already thinking of clubs that fit into each category.

That’s also the distinction we need to make with our investments. And, unfortunately, it requires more work than checking the share price.

A falling price doesn’t, by itself, tell you that the business is broken.

Nor does a rising price prove that everything is going wonderfully.

The price is what other investors are prepared to pay, right now. It isn’t a complete assessment of the company’s future.

It might be right. Or wrong. It might change tomorrow. Or not.

So, what should we look at?

You’re already ahead of me, right?

You need to look at the business. Not the three-letter code on your screen.

Are customers still buying what it sells? Is it maintaining its competitive position? Is cash coming through the door? Can it comfortably handle its debts?

And, where something has gone wrong, is there credible evidence – or at the very least, a high likelihood – that the problem can be fixed?

Consider a hypothetical retailer spending money on a new distribution centre. Profits might suffer while it gets the facility running. If customers remain loyal and the investment does what management promised, patience might be entirely sensible.

Now imagine another retailer losing customers because a competitor offers something better. Management keeps talking about “challenging conditions”, but the competitor seems to be doing just fine. Yes, I’m looking at you, Myer Holdings Ltd (ASX: MYR) and DJs.

Those are very different scenarios… and neither can be diagnosed from a red number on a screen.

The danger is that, once we own something, we can start looking for reasons to defend it.

We liked the company enough to buy it. Perhaps we told a mate about it. Selling would mean admitting we got something wrong.

Thing is… sometimes we do. I’d rather acknowledge a mistake than keep losing money because of it.

It’s also possible that we didn’t make a mistake at the time, but that circumstances have changed. We need to recognise that.

On the other hand, I’d also rather endure an uncomfortable period than abandon a good business just because the market has lost patience.

Holding on, out of stubbornness? Selling to cauterise the wound and stop the pain?

They’re both bad ideas.

The right approach? Become more honest about why you still own what you own.

Here’s the question to ask, even before share prices start moving:

“What would have to happen for me to change my mind about this business?”

Not how much the share price might move – but what would need to change about the company itself.

Losing a competitive advantage, perhaps. Taking on more debt than it can sensibly manage. Discovering that the opportunity you thought existed was smaller than you’d assumed – either because you sized it wrong, or because the company just didn’t execute (Remember Woolworths Group Ltd (ASX: WOW)’s short foray into hardware? Yeah, that.)

Write that down before you need it. Then revisit it when meaningful new information arrives, rather than rewriting the test to excuse every disappointment.

Long-term investing should mean giving a sound investment case time to play out. It shouldn’t mean refusing to notice when that case has changed.

Your job isn’t to prove that every decision you’ve ever made was right.

It’s to make good decisions with the information you have now.

So, enjoy the footy. Be hopelessly biased. Leave one eye closed, at least until the final hooter/whistle/siren.

(But also, lay off the umpires and referees, and congratulate the other team if they win.)

And yes, be loyal to your portfolio… but its long term potential, not the ‘players’ inside it.

Tomorrow’s Grand Final? I’m a New South Welshman, talking about a game in Victoria, played between a team from Queensland and one from Western Australia. Fair to say, I have no dog in that fight.

But tonight?

Go the mighty Chooks! #EastsToWin

Fool on!

The post Don’t treat your companies like your footy team appeared first on The Motley Fool Australia.

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• Woolworths shares jump 31% in 2026. Is there any upside left?
• Why I’d buy the dip in top ASX 200 gold stocks like Newmont, Northern Star and Evolution Mining shares today
• Could two more RBA rate hikes push Australia into recession?

Motley Fool contributor Scott Phillips 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 recommended Myer. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.