How many Wesfarmers shares must I buy to get $100 in monthly passive income?

Wesfarmers is a great stock for dividends, in my view.

| More on:
Man holding a calculator with Australian dollar notes, symbolising dividends.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Owning Wesfarmers Ltd (ASX: WES) can be very rewarding in terms of the passive income we get. In this article, we're going to look at how many Wesfarmers shares we need to get $100 of monthly dividends.

The business has delivered lots of capital growth recently, and over the long-term. In the past six months, it has risen 24%, in the last year it has gone up 35% and in the past five years it has climbed 90%.  

Wesfarmers dividend forecast

The company wants to grow its dividend each year for shareholders if it can and if it has made enough profit to do so.

Looking at the estimates on Commsec, Wesfarmers is predicted to grow its dividend per share to $1.95, which would be a year-over-year increase of 2%.

The projection on Commsec suggests it could grow its annual dividend per share to $2.35 by FY26, which would be a 20% rise between FY24 and FY26.

How many Wesfarmers shares are needed for $100 of passive income per month?

Wesfarmers usually pays a dividend every six months, not monthly. Therefore, it's better to think about the goal as $1,200 per year.

How many Wesfarmers shares do we need to own for $1,200 per year? If Wesfarmers does pay a dividend per share of $1.95, we'd need to own 616 Wesfarmers shares (for a cost of $40,755). If we include the franking credits as part of the annual income, we'd need 431 Wesfarmers shares (for a cost of $28,515).

Can the payout keep growing?

In the FY24 first-half result, Wesfarmers' board decided to increase its interim ordinary dividend per share by 3.4% to 91 cents.

It had a decent start to the financial year despite the difficult trading conditions amid the high cost of living for Australians. HY24 revenue increased 0.5% to $22.67 million, and net profit after tax (NPAT) rose 35% to $1.4 billion.

Kmart Group and Bunnings continue to deliver growth, with Kmart performing particularly well as customers look for good value. In the first five weeks of the second half of FY24, Kmart Group has "continued to deliver strong sales growth".

It seems there is a good chance of dividend growth this year and beyond, particularly when interest rates start coming down, which could help households' finances.

Wesfarmers shares are certainly one of the stocks I'd like to have in my portfolio for passive income.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

Man smiling at a laptop because of a rising share price.
Dividend Investing

Why this is one of my top ASX dividend shares to buy in June

This ASX dividend share provides everything I’m looking for.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Dividend Investing

Forget Westpac and buy these ASX dividend shares

Let's see what analysts are saying about these income options.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Dividend Investing

Brokers say Harvey Norman and these ASX dividend stocks are buys

Let's see what brokers are recommending as buys for income investors.

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

Analysts say these ASX dividend stocks are top buys for income investors

Let's see which stocks are being tipped as buys.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

Buy these ASX dividend shares for 4% to 11% yields

Analysts expect these buy-rated shares to offer great dividend yields.

Read more »

fingers walking up piles of coins towards bag of cash signifying asx dividend shares
Dividend Investing

I think these 2 ASX dividend stocks are buys for income in June

These businesses can provide solid income for investors.

Read more »

A businesswoman weighs up the stack of cash she receives, with the pile in one hand significantly more than the other hand.
Dividend Investing

Why I think this is the best ASX dividend share to own

This business has so many positive attributes…

Read more »