Why the Wesfarmers (ASX:WES) share price is trading at record highs

Wesfarmers shares bolted to record highs yesterday. The Aussie conglomerate has now soared 24% since the start of 2021.

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At climber at the top of a mountain, indicating a share price on the ASX that has hit a record high

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The Wesfarmers Ltd (ASX: WES) share price bolted to record highs during Wednesday’s session.

Shares in the Aussie conglomerate hit a record high of $62.765 during intraday trading yesterday, before closing at $62.55.

It’s been a magnificent year thus far for the Wesfarmers share price. Shares in the company have soared more than 24% since the start of 2021, making them among the top performers on the S&P/ASX 200 Index (ASX: XJO). 

Let’s take a look at what’s been fueling the Wesfarmers share price.

Renewed strategy

Wesfarmers operates household banners such as Bunnings, K-Mart, Officeworks and Target.

With a spate of COVID-19-induced lockdowns over the past 12 to 18 months, many of these businesses have benefitted from a surge in consumer demand for home office and home improvement products.

In addition to enjoying the tailwind of soaring customer demand, the conglomerate has also embarked on an ambitious growth strategy.

Wesfarmers has focused on investing in new growth platforms and selling unwanted assets. One example of this new strategy was reflected by the company divesting its coal business and expanding into the burgeoning lithium sector.

In addition, Wesfarmers has also made its intentions clear about expanding into the beauty and pharmaceutical sector. This was illustrated by the company’s $687 million offer for Australian Pharmaceutical Industries Ltd (ASX: API).

Wesfarmers shares price dividend yield

Wesfarmers shares have been attractive to some investors for their dividend yield, which currently sits at just under 3%.

In FY20, Wesfarmers paid shareholders a final dividend of 77 cents per share, in addition to a special dividend of 18 cents.

The conglomerate’s interim dividend for FY21 was booked in at 88 cents per share.

As a result, Wesfarmers has paid a total of $1.83 per share over the past 12 months.

Outlook for the Wesfarmers share price

Many investors will be tuning in the August reporting season for greater insight into how Wesfarmers has been performing over the past financial year.

Recently, noted broker Goldman Sachs released a note on what investors could expect from Wesfarmers this reporting season.

According to analysts, the conglomerate is expected to produce full-year revenue of $34,132.1 million and earnings before interest and tax (EBIT) of $3,508 million.

In addition, the broker expects Wesfarmers to reveal a $1.84 per share dividend.

Wesfarmers is slated to report its earnings on Friday 27 August.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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