I've added Wesfarmers Ltd (ASX: WES) shares to my ASX share portfolio in the last year. At more than a century old, the ASX 200 retail and industrial conglomerate is one of the oldest companies in Australia.
So why have I chosen this old giant of the ASX? Let's discuss four reasons…
Why I have added Wesfarmers shares to my ASX portfolio
1. Wesfarmers is one of the most diversified ASX blue chip shares
Although Wesfarmers is just one company, in reality, it is more like a dozen. Wesfarmers has so many operations, it's hard to give them all credit. There are the retailing powerhouses of Bunnings, OfficeWorks, Kmart and Target to consider.
But Wesfarmers also owns Covalent Lithium, Klenheat Gas, the Workwear Group, Wesfarmers Chemicals, Energy & Fertilisers, and most recently, the old API Group, which owns the Priceline pharmacy chain.
I think this disparate group of companies gives Wesfarmers an incredible edge when it comes to diversification.
2. Performance
When we boil down investing, it's really only performance that matters in the long run. And in this respect, I have been heartened by Wesfarmers' long history of delivering returns to its shareholders. Just take the past five years.
Since September 2017, the Wesfarmers share price has appreciated by just over 46%. In stark contrast, the S&P/ASX 200 Index (ASX: XJO) has only gained around 15.6% over the same period. Thus, I'd have much rather owned Wesfarmers over the past five years than an ASX 200 index exchange-traded fund (ETF).
3. Wesfarmers shares are dividend heavyweights
ASX investors love their dividends, and so do I. That further adds to my attraction for Wesfarmers shares. This company has a long and proud history of paying its shareholders hefty and fully franked dividend payments.
The $1.80 per share in dividends investors will enjoy in 2022 comes in above the $1.78 paid out last year. That again was greater than the $1.70 total for 2020. That's a streak I'm happy to be a part of.
4. A stellar management team
In my view, Wesfarmers' management has proven time and time again that they are a steady hand on the tiller.
From the successful spinoff of Coles Group Ltd (ASX: COL) in 2018 to the entry into lithium, before it was cool, Wesfarmers' management has clearly got a clue as to how to run a successful conglomerate. Again, we can also point to the company's share price performance for further proof.
