Kalkine AU Says: Wesfarmers shares dip from 52-week highs as dividend holds steady

February 20, 2024 02:55 PM AEDT | By Team Kalkine Media

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Kalkine AU Says: Wesfarmers shares dip from 52-week highs as dividend holds steady — Image source: TZIDO SUN, Shutterstock

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Investors eyeing the latest dividend from Wesfarmers Ltd (ASX: WES) have missed their chance as the window for eligibility closed yesterday. Now trading ex-dividend, any purchases made today will not qualify for the retail conglomerate's payment. ASX listed consumer stocks, reflecting companies operating in retail and other consumer-oriented sectors, are closely monitored alongside Wesfarmers Ltd's performance for insights into consumer spending trends and market sentiment in the consumer sector.

Wesfarmers shares, valued at $63.00 each this morning, experienced a 1.5% decline following the dividend announcement last Thursday.

Highlights of Wesfarmers' Interim Dividend

Despite challenging retail conditions amidst exceptionally high interest rates, Wesfarmers delivered a robust half-year result. The company, known for owning Kmart, Bunnings, and Officeworks, reported a 3% increase in net profits after tax (NPAT) to $1.43 billion.

Buoyed by stronger earnings, Wesfarmers raised its fully franked interim dividend by 3.4% to 91 cents per share. This marks the largest interim dividend since April 2019, reflecting the company's resilience in adverse market conditions.

Over the past 12 months, shareholders have accumulated $1.94 of income per share, translating to a dividend yield of 3.08% based on the current share price. With franking included, the figure improves to approximately $440 for a $10,000 holding in Wesfarmers.

Eligible shareholders can expect to receive Wesfarmers' interim dividend on 27 March 2024.

Future Prospects for Wesfarmers Shares

While the opportunity to benefit from Wesfarmers' latest dividend has passed, analysts at investment bank Jefferies suggest that the stock may still offer potential for future income generation.

Impressed by the company's performance amidst challenging cost inflation, analysts have raised their Wesfarmers share price target from $57.00 to $60.00.

Looking ahead, full-year earnings are forecasted to reach $2.53 billion in FY24 and $2.76 billion in FY25, surpassing the $2.465 billion profits recorded in FY23. Should these projections materialize, shareholders may anticipate continued dividend growth in the coming years.

While the ex-dividend date may have passed, Wesfarmers' long-term income potential remains an attractive prospect for investors seeking stable returns.

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