Can Wesfarmers shares deliver an attractive dividend yield AND 20% upside in 2022?

Could the Wesfarmers share price reach $58.50?

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Key points

  • One broker is predicting a 20% upside for the Wesfarmers share price, forecasting that it will reach $58.50 
  • Additionally, the broker expects the conglomerate will pay investors $1.62 of fully franked dividends for each share they hold in financial year 2022 
  • That is expected to be boosted to $1.81 per share in financial year 2023 

This year so far has been a downhill rollercoaster for the Wesfarmers Ltd (ASX: WES) share price.

It’s currently trading for 19.31% less than it was at the start of the year. Right now, the Wesfarmers share price is $48.43.

For context, the S&P/ASX 200 Index (ASX: XJO) has slipped just 1.45% year to date.

However, Wesfarmers’ home sector – the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) –has slumped 16.97% so far this year.

But could things be about to turn around for one of the Aussie market’s favourite retail (and industrial) conglomerates? One broker is predicting big things from the company in the future. Let’s take a look.

What could the future bring for Wesfarmers’ shares?

The Wesfarmers share price could be getting ready to take off on an upwards trajectory, and the company’s dividends could be along for the ride.

As The Motley Fool Australia’s James Mickleboro recently reported, Morgans is spruiking the company as “one of the highest quality retail portfolios in Australia.”

That portfolio houses some of Australia’s most recognisable storefronts, including Bunnings, Kmart, Target, Officeworks, and even online retailer, Catch.

Its recent acquisition of Australian Pharmaceutical Industries sees Wesfarmers also house Priceline, Soul Pattinson Chemist, and Clear Skincare.

On top of that, Wesfarmers owns a suite of chemical, energy, fertiliser, industrial, and safety brands. It even has an interest in a lithium mine.

With all that on Wesfarmers’ plate, those running the shop must be busy. Fortunately, Morgans believes its led by “a highly regarded management team” and has a “healthy” balance sheet.

Morgans has a $58.50 price target on Wesfarmers’ shares. That represents an upside of nearly 20.8% on the company’s current share price.

Additionally, the broker believes the conglomerate will be posting $1.62 of fully franked dividends per share this financial year and $1.81 per share in financial year 2023.

For context, Wesfarmers handed out $1.78 per share last financial year and $1.52 (plus an 18 cent special dividend) in financial year 2020.

It has also paid out an 80 cent interim dividend late last month.

If Morgans’ prediction comes true, that would leave Wesfarmers with a dividend yield of 3.3% this financial year and 3.69% next financial year, based on its share price at Friday’s close.

Motley Fool contributor Brooke Cooper 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 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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