Wesfarmers Ltd (ASX: WES) is one of Australia's best blue-chip companies, with a current market capitalisation of almost $48 billion.
3 reasons to own Wesfarmers Ltd shares in 2017
Given its size and presence in the Australian market, Wesfarmers forms the bedrock of many investors' portfolios. Although the chart above shows a mediocre share price performance over the past decade there are two key takeaways:
- The chart ignores Wesfarmers' dividend payments, which have been substantial; and
- Buying at the right time (e.g. from late 2008 thru 2012) has rewarded shrewd investors
Looking ahead there are many reasons to hold Wesfarmers shares, here are three of my favourite:
- Dividends. Wesfarmers shares are forecast to yield a dividend equal to 4.7% fully franked. Pretty impressive.
- Brand power. Wesfarmers is the corporation behind names like Coles, Bunnings Warehouse, Officeworks, Kmart, Target and more. That kind of brand power offers it defensive revenue streams and multiple ways to grow.
- Management. Led by Richard Goyder, Wesfarmers' strategic management and succession planning is second to none. Goyder has been at the helm of the company since 2005.
Buy, Hold or Sell
Wesfarmers is one of Australia's premier companies. However, at today's prices its shares look quite expensive. For that reason, I think it deserves a 'hold' rating. As evidenced by the above, although it has great defensive qualities it is not immune to share price falls. I'd look to buy shares below $35.
