Wesfarmers Ltd (ASX: WES) shares are a popular option for income investors.
That's because each year the conglomerate shares a sizeable portion of its profits with its shareholders in the form of dividends.
In fact, over the last decade, the lowest payout ratio for Wesfarmers was 79% in FY 2016.
Another reason that Wesfarmers shares are popular with investors is the company's defensive qualities.
Thanks to its diverse portfolio of businesses, which includes Bunnings, Kmart, and fertiliser and chemicals company CSPB, Wesfarmers continued to perform positively during the pandemic. This allowed the company's board to continue paying dividends when others companies were struggling.
In light of the above, it isn't hard to see why many investors choose Wesfarmers shares for their income portfolios.
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What would it take to earn $25,000 of income from Wesfarmers shares?
According to a note out of Morgans, its analysts are expecting Wesfarmers to declare a $1.82 per share fully franked dividend in FY 2023. This will be up slightly from the $1.80 per share dividend it paid last year.
Based on the current Wesfarmers share price of $49.79, this equates to a 3.65% dividend yield.
This means that if you wanted to earn a $25,000 second income from Wesfarmers shares, you would need to own approximately 13,756 shares.
Unfortunately, though, it would take a considerable investment of $685,000 to purchase this number of shares. So, it may not be feasible for the majority of investors.
But don't let that put you off trying to do this in the future. With a combination of time, patience, and compounding, investors could put themselves in a position to make this type of investment.
For example, an annual investment of $20,000 into the share market would turn into $700,000 in 15 years if you were able to earn an average of 10% per annum. This is the historic average return of the stock market, so certainly possible. Though, it is worth remembering that past performance is no guarantee of future returns.
