Owners of Wesfarmers Ltd (ASX: WES) shares will want to know about how big the dividends in the upcoming financial years could be.
The owner of Kmart, Bunnings, and Officeworks has proven its ability to grow profits and raise dividends.
Dividends are funded from profit generation. The value credentials at Kmart and Bunnings continue to attract new customers through the doors.
The company is projected to continue delivering good payouts for shareholders in the coming years. Let's take a look at how EBS expects Wesfarmers to perform in the coming years for income-focused investors.
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FY26
The business recently held its annual general meeting (AGM) which, in broker UBS' words, showed Bunnings and Kmart sales growth remained strong, while Officeworks is targeting a reset of earnings before tax (EBT).
The broker said Bunnings has growth options across category, channel and customer – these options are capital-light, enabling expanding returns on capital (ROC).
UBS said that Kmart is expected to continue to benefit from rising customer numbers, transaction frequency and category participation. The broker said it's confident that Kmart's value credentials and Anko product development capabilities can support sales in different consumer environments.
On the non-retail side of things, the WesCEF (chemicals, energy and fertilisers) business is seeing costs and Priceline is seeing "strong" network sales growth thanks to improved retail execution, network expansion, price reductions and new ranges.
Currently, the broker UBS is only expecting a little bit of financial progression in the 2026 financial year. UBS suggests the dividend per Wesfarmers share could rise to $2.08 in FY26.
FY27
The retail giant is expected to deliver a stronger level of profit in FY27, which should help the company deliver a larger dividend.
UBS predicts that the annual dividend per share could rise to $2.30, which would be a pleasing payout.
FY28
Wesfarmers could grow its net profit again in the 2028 financial year.
In FY28, UBS is predicting that the company's dividend per share could rise to $2.59, which means it has grown by approximately a quarter in size by the 2028 financial year compared to FY25.
FY29
The 2029 financial year could show things get even better for Wesfarmers, if UBS' predictions come true.
UBS predicts that the Wesfarmers annual dividend per share could reach $2.82 in FY29.
FY30
The final year of this series of projections could be the best of all for owners of Wesfarmers shares.
UBS suggests that the Bunnings and Kmart owner could pay an annual dividend per share of $3.14 in FY30. At the time of writing, that translates into a grossed-up dividend yield of 5.5%, including franking credits.
