Wesfarmers Ltd (ASX: WES) is one of the most popular shares on the ASX. Thanks to its long history as an Australian public company, not to mention its famous ventures such as buying Coles Group Ltd (ASX: COL) more than a decade ago, Wesfarmers is a staple of your typical ASX investor's share portfolio.
But past performance and a good reputation are no guarantee of future success. So let's talk about five reasons to buy Wesfarmers shares today.
5 reasons to buy Wesfarmers shares today
Wesfarmers has a proven management team
Wesfarmers has one of the ASX's most prominent management teams. Many of its senior leadership have been with the company for decades. The current CEO, Rob Scott, started at Wesfarmers back in 1993.
But don't take my word for it. Jabin Hallihan, an analyst at ASX broker Morgans, recently told The Bull that his firm is bullish on Wesfarmers. And a significant reason for that conviction was the company's management, with Hallihan stating that "we continue to back a proven management team".
The Wesfarmers dividend
You aren't going to make too much hay with ASX investors until you start paying a fat, and preferably fully franked, dividend. Luckily for Wesfarmers, it has been doing just that for decades.
Right now, Wesfarmers shares offer investors a trailing dividend yield of 3.83%, which comes with full franking credits. That's a higher yield than what many other ASX blue-chip shares currently have on the table, including CSL Ltd (ASX: CSL) and Woolworths Group Ltd (ASX: WOW).
Diversification
Wesfarmers is one of the most diversified blue-chip shares on the ASX, period. Most investors would be familiar with the company's crown jewel, hardware titan Bunnings. But Wesfarmers owns several other retail heavyweights, including Kmart, Target, and OfficeWorks.
In addition to those strong businesses, Wesfarmers owns an interest in a variety of other companies, including Workwear Group, Coregas, Kleenheat Gas, Blackwoods, Australian Gold Reagents, Queensland Nitrates and Covalent Lithium.
So if you're after a quality business with its fingers in many pies, Wesfarmers has little competition. That's the view of Shaw and Partners' Jed Richards, also at The Bull. Richards commented that "A key quality [of Wesfarmers shares] is the company's diversified earnings streams".
Exposure to future-facing industries
Leading on from its diversification, Wesfarmers is also a company that has shown a knack for what the Americans would call 'skating to where the puck is going'.
It had the foresight to get into the lithium game early, with its acquisition of Kidman Resources in 2019. Wesfarmers now has a 50% stake in one of the country's most promising lithium projects in Mt Holland.
Further, Wesfarmers acquired the pharmacy chain Priceline last year as well, boosting its exposure to the ever-growing healthcare industry.
Share price
Last but certainly not least, let's talk about the Wesfarmers share price itself. So Wesfarmers hasn't had the greatest couple of years. Yesterday, the conglomerate closed at $49.06 a share.
That's a good 6.8% off of the 52-week high of $52.79 a share that we saw back in April. Not to mention a whopping 25% down from the all-time highs of over $66 a share that was going around in 2021:
But this has left Wesfarmers with an arguably reasonable price-to-earnings (P/E) ratio of 22.22 today. That's much cheaper than many other ASX blue chips, including Woolworths, CSL, Transurban Group (ASX: TCL) and Telstra Group Ltd (ASX: TLS).
