Is the Wesfarmers share price a buy?

Is the Wesfarmers Ltd (ASX:WES) share price a buy?

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Is the Wesfarmers Ltd (ASX: WES) share price a buy?

The company has been operating for over a century and still has a focus on creating long-term returns for shareholders.

It has been a solid dividend ASX share for a long time and has been increasing its dividend as a way to reward shareholders. It also recently paid a special dividend.

Wesfarmers operates a variety of businesses including Bunnings, Kmart, Target, Officeworks and various industrial businesses. It also owns large stakes of spin-offs Coles Group Limited (ASX: COL) and BWP Trust (ASX: BWP). It's fairly retail focused.

Most recently the company has been looking to expand again in the resources space. It tried to acquire Lynas Corporation Ltd (ASX: LYC) and now it's in the process of acquiring lithium business Kidman Resources Ltd (ASX: KDR). There are useful synergies to be had between Wesfarmers and a resources business like Kidman.

With Coles out of the Wesfarmers business, the conglomerate is reaching new highs with the share price up to $37.75 at the time of writing.

With the recent Liberal Federal Election win, things could be looking up for several of Wesfarmers' businesses. The property sector might give Bunnings a boost if all of the commentary is to be believed. Officeworks, Kmart and Target could get a retail boost from the consumer if sentiment turns around.

Over the longer-term I think it would be best for Wesfarmers if it moved away from retailing, it's a tough industry.

Foolish takeaway

I don't think Kidman is the sole solution to Wesfarmers' future. I imagine there will be more acquisitions in the coming years which will provide further clarity for Wesfarmers' direction for us from here.

However, trading at 21x FY20's estimated earnings and a projected grossed-up dividend yield of 5.7%, I don't think it's the right time to buy Wesfarmers shares.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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