The Wesfarmers Ltd (ASX: WES) dividend has pipped higher this earnings season due to strong tailwinds from the company. This comes as the conglomerate's Bunnings and Kmart Group businesses delivered impressive growth in FY21.
The surging profits led the company to give back to its shareholders, reflecting its consistent dividend policy.
But let's see how the Wesfarmers dividend stacks up against its rivals.
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How does the Wesfarmers dividend compare to its sector?
Wesfarmers is set to pay a fully franked final dividend of 90 cents per share to eligible investors on 7 October.
When combined with its interim dividend of 88 cents apiece, this brings the total FY21 dividend to $1.78, a 17.1% increase on FY20.
Based on the closing Wesfarmers share price of $57.44 yesterday, this implies a dividend yield of 3%.
In comparison, Woolworths Group Ltd (ASX: WOW) will reward its shareholders with a final dividend of 55 cents per share. This will be payable on 8 October, after going ex-dividend last week.
The full-year dividend, comprising of an interim dividend of 53 cents apiece, equates to $1.08 per share. This represents a 14.9% lift on the prior full-year dividend (FY20).
The Woolworths share price finished yesterday at $40.54, which gives it a dividend yield of 2.6%.
Another Wesfarmers competitor which may surprise you is BHP Group Ltd (ASX: BHP).
Wesfarmers also is involved in the manufacture and commercialisation of industrial explosives, chemicals and fertilisers for mining and agriculture sectors.
BHP is on track to distribute a final dividend of US$2.00 (A$2.74) per share to shareholders on 21 September. The company's interim dividend for the FY21 period came to US$1.01 (A$1.31) a pop, translating to a full-year dividend of US$3.01 (A$4.05).
Calculating using the last price of $42.04 for BHP shares, this is a juicy dividend yield of 9.6%.
Comparing the Wesfarmers dividend yield against its peers may be one point to consider when investing. However, it is important to also look at the total shareholder return for the past 12 months.
As such, Wesfarmers shares have gained 24% for the period, while Woolworths and BHP shares have moved up 22% and 13%, respectively.
Do experts think Wesfarmers shares are a buy?
A number of brokers weighed in after the company released its full-year results in late August.
Analysts at Macquarie slapped a "neutral" rating on the Wesfarmers share price, cutting its outlook by 3.3% to $61.35. On the other hand, Morgans and Credit Suisse raised their price targets by 5.2% to $59.00 and 2% to $59.91, respectively.
However, the most recent broker note came from Citi which also raised its view on Wesfarmers shares by 4.3% to $49.00. Based on the current share price, this implies a downside of around 15% on Citi's assessment.
Wesfarmers commands a market capitalisation of roughly $65.1 billion, making it the seventh-largest company on the ASX.
