As most ASX investors would be aware, the Australian stock market has had a rough couple of weeks. As it stands today, the S&P/ASX 200 Index (ASX: XJO) is now down by a hefty 7.2% or so since the last record high in late October. Some ASX stocks have fallen by less than that, others by more. Let's talk about one ASX dividend stock that falls into the latter camp.
That ASX dividend stock is none other than Wesfarmers Ltd (ASX: WES).
Wesfarmers is well-known in the ASX investing community, given it is a large, blue chip stock that has been listed for decades. More broadly, though, Wesfarmers is less well-known. However, many of the underlying companies this conglomerate owns and runs are household names. These range from Target and OfficeWorks to Kmart and Bunnings, its two crown jewels.
But Wesfarmers owns far more than those four retailers. This company has its fingers in many a pie, ranging from mining and chemical manufacturing to gas distribution and pharmacies.
This inherent diversity makes Wesfarmers a compelling investment case on its own, given that an investor is buying into a healthy mix of different businesses that span different corners of the economy. But that diversification is just one of the reasons I consider this ASX dividend stock to be a magnificent buy-and-hold-for-decades investment.
Image source: Getty Images
Why this ASX dividend stock is a magnificent investment
Wesfarmers, although diversified, has proven itself to be a prudent and shareholder-focused steward of investors' capital. It has always been prepared to throw money after its successes, whilst cutting its losses on ideas that are past their peak.
Its spinoff of Coles Group Ltd (ASX: COL) back in 2018 has been an unbridled success or shareholders, as has its acquisition of Priceline so far.
But it is the Wesfarmers share price that shines the brightest light on why this is a magnificent ASX dividend stock. Over the past ten years, Wesfarmers shares have grown by an average rate of approximately 8.34% per annum. And that's including its recent 15% slump.
Including dividends, which Wesfarmers has steadily been increasing for years now, that return stretches to about 11.7% per annum, making this stock a bona fide market beater.
Speaking of share price slumps, Wesfarmers has indeed come off the boil in recent weeks. This ASX dividend stock has dropped from its October record high of $95.18 to just over $80 a share today. That's a loss worth 15% or so.
With a price-to-earnings (P/E) ratio of 31.2, and a dividend yield of 2.56% today, it's still hard to call Wesfarmers cheap. However, it is a lot cheaper than it has been. And besides, quality rarely comes cheap on the ASX.
