Wesfarmers Ltd (ASX: WES) shares are the talk of the town at cocktail parties when dividends get brought up.
After all, Wesfarmers is the owner of some of Australia's best retail businesses:
- Coles
- Bunnings Warehouse
- Kmart
- Target
- Officeworks
The $48 billion heavyweight also owns businesses in the resources sector, including coal.
All-in-all, it's a pretty well-known Australian blue chip.
1 ASX dividend share instead of Wesfarmers
However, Wesfarmers is already one of Australia's biggest companies, with its fingers in many pies. Everyone knows it businesses and naturally it finds itself in the news.
For investors like you and me, that means its shares will rarely fall into 'bargain territory'.
Since it has hoards of professional investors and analysts following its every move, it rarely gets beaten down without reason.
And as they say, if it's in the news, it's in the price.
Fortunately, if you look a little further down the market you can find some wonderful businesses offering superb dividends.
One such example is Integrated Research Limited (ASX: IRI), a $500 million software business.
An investment in Integrated Research shares has one key difference to Wesfarmers. Integrated Research is as much a growth share as it is a dividend share.
Over the past five years, the Integrated Research share price is up more than 320% yet it still pays a handy dividend of 2.4% with franking.
Now, I know what you are saying, "Wesfarmers yields a 5% dividend — fully franked!"
That's true, Wesfarmers has a bigger yield…right now. But that comes with the terrain, you are not buying Integrated Research only for the dividend.
Over the past five years, Wesfarmers shares are up 41%.
I know which one I would choose if we could go back five years.
Should you buy Integrated Research shares?
There's no guarantee Integrated Research will continue outperforming. And given that it is riskier than Wesfarmers, you should position it accordingly. That is, it should have a smaller position than a blue chip in your portfolio. However, at today's prices, I'd rather buy Integrated Research shares over Wesfarmers — for its dividend and growth.
