The ASX dividend share champion Wesfarmers Ltd (ASX: WES) has risen 28% in the past year and 90% in the last five years. I think it's a great buy for lifetime passive income.
Wesfarmers may not be a widely known name in Australia, but it's actually one of the largest businesses, with a market capitalisation of $102 billion.
The company is the owner of various Australian businesses you probably have heard of, including Bunnings, Kmart, Officeworks, Priceline, Target, Instantscripts, and plenty more.
The business has been listed for decades and has also paid a dividend for a long time. I believe the ASX dividend champion is one of the best options for Aussies wanting passive income.
Let's look at what makes it so appealing.
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Dividend growth expected
For me, one of the most important things with an ASX dividend share champion is that the business is growing its payout.
Wesfarmers has a good track record of growing its annual dividend regularly over the past fifteen years, with expectations of further passive income growth in the coming years, thanks to the performance of the Wesfarmers businesses.
I'm expecting regular dividend growth over the rest of the decade, and the broker UBS has some specific forecasts for the payout.
UBS predicts that Wesfarmers could pay an annual dividend per share of $2.11 in FY26, $2.35 in FY27, $2.63 in FY28, $2.86 in FY29, and $3.17 in FY30.
Excellent businesses
The dividend isn't expected to grow by accident; it's being driven by the strength of excellent performance by Wesfarmers. I've written regularly over the last few years about the impressive return on capital (ROC) that Bunnings and Kmart achieve – they both delivered a ROC of over 67% in FY25.
Wesfarmers itself achieved an underlying return on equity (ROE) of 31.2% in FY25, suggesting future retained profit could deliver an excellent return.
Kmart and Bunnings are the key earnings generators for Wesfarmers, and so are essential for the dividend payments.
I'm optimistic that Wesfarmers' profit can continue rising in the years ahead because Bunnings and Kmart continue finding growth avenues (such as selling Anko products overseas).
Industry diversification
An underrated reason to like the ASX dividend share champion is that the business has the flexibility to invest in other areas. It already has a chemicals, energy and fertiliser (WesCEF) division, which includes lithium mining. The company also has an industrial and safety segment.
By having the potential to grow into other areas, it can future-proof itself if some industries become more attractive to invest in or others become less attractive to be involved in.
In 20 years, the Wesfarmers business portfolio could be quite different, which is one of the reasons why I think it's a pleasing long-term idea for passive income.
