How does the Wesfarmers (ASX:WES) dividend compare to Woolworths?

How does the Wesfarmers dividend stack up today?

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The Wesfarmers Ltd (ASX: WES) share price has kicked off to a poor start today. At the time of writing, Wesfarmers shares are trading at $56.25, down 0.85%.

Wesfarmers is now down close to 15% over the past month or so. Just last month, this company was clocking new all-time highs, eventually peaking at $67.20 a share around 20 August. But it has been a rather steep slide since then.

Although lower share prices can be disappointing for existing investors, they also mean a higher starting dividend yield for new investors. So let’s take a look at how the Wesfarmers dividend stacks up today.

When Wesfarmers reported its FY21 earnings report last month, it included a final dividend of 90 cents per share. This will be paid out on 7 October. That brought Wesfarmers’ full-year dividend to $1.78 per share for FY21, an increase of 17.1% over FY20’s payouts.

This full-year dividend of $1.78 a share gives Wesfarmers a dividend yield of 3.16% on current pricing, or 4.51% grossed-up with Wesfarmers’ full franking credits.

Those are some pretty healthy numbers, especially considering that interest rates remain at essentially zero.

But how do they compare to Wesfarmers’ peers? Let’s check out how this dividend stacks up against Wesfarmers’ old flame Coles Group Ltd (ASX: COL) as well as Coles’ arch-rival Woolworths Group Ltd (ASX: WOW).

How does the Wesfarmers dividend compare to Coles and Woolworths shares?

So Coles also announced a dividend increase in its FY21 earnings report last month. Coles announced a final dividend of 28 cents per share, to be paid out on 28 September. This will bring Coles’ dividends for FY21 up to 61 cents per share, a 6.1% increase on FY20.

This would, in turn, give Coles shares a dividend yield of 3.55%, or 5.07% grossed-up with Coles’ full franking. That’s slightly ahead of Wesfarmers, at least on today’s prices.

Let’s see how these two yields compare to that of Woolworths today.

Woolworths, not to be left behind, also increased its dividend last month during earnings season. It announced a final payout of 55 cents a share, to be paid on 8 October. That brought Woolies’ FY21 dividends to $1.08 per share, a 14.9% increase on FY20’s shareholder payments.

That would give Woolworths a dividend yield of 2.76% on current pricing, or 3.94% grossed-up with Woolworths’ full franking.

So out of Wesfarmers, Woolworths and Coles today, it seems that Coles shares offer the largest starting dividend yield based on the latest share prices.

At the current Wesfarmers share price of $56.25, the company has a market capitalisation of $63.78 billion, and a price-to-earnings (P/E) ratio of 26.75.

Should you invest $1,000 in Wesfarmers right now?

Before you consider Wesfarmers, you'll want to hear this.

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Motley Fool contributor Sebastian Bowen 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 COLESGROUP DEF SET and 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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