Wesfarmers Ltd (ASX: WES) shares and Commonwealth Bank of Australia (ASX: CBA) shares pay great dividends to shareholders.
Track Record
One way to get a sense of a company's potential to pay dividends is to look at its track record.
As can be seen in the chart above, Commbank and Wesfarmers have paid a consistent stream of dividend income to shareholders. In 2008/2009, Wesfarmers dropped its dividend payments substantially. However, in addition to the Global Financial Crisis (GFC), Wesfarmers was still digesting its acquisition of Coles.
Wesfarmers
Wesfarmers is the owner of Coles, Bunnings Warehouse, Kmart and Target. It also owns Officeworks and an Industrials business, which it is hoping to sell. Wesfarmers' diverse retail companies afford it a healthy buffer against difficult market conditions. At today's prices, it is forecast to pay a 5% fully franked dividend.
Commonwealth Bank
Commbank is Australia's biggest bank and company, worth around $148 billion. The bank is Australia's leader in household lending and deposits, and a major player in the credit card market. It is forecast to pay a 4.9% fully franked dividend over the next year.
While Commbank is a large established company, it is important to remember that a bank's shares — and profits — can be extremely cyclical. For example, if the property market slowed down and unemployment and interest rose faster-than-expected, CBA's dividend would almost certainly come under pressure.
Foolish Takeaway
This is just a quick overview of these two dividend stalwarts. My preferred dividend share is Commonwealth Bank over the long-term. However, neither of these two blue chips are a 'buy' at today's prices, in my opinion. I'm waiting for a lower share price.
