Whilst the past 12 months have been generally kind to the S&P/ASX 200 Index (ASX: XJO), there have been many swings and roundabouts amongst the prices of some of the ASX's most popular dividend shares.
A lot has happened on the world stage between January 2025 and today. We have seen tariffs, trade wars, precious metals hitting record highs, interest rate cuts, and stubborn inflation. As such, the prices of many high-quality ASX shares have been volatile. And this gives the discerning ASX investor some buying opportunities.
One such opportunity could be the Wesfarmers Ltd (ASX: WES) share price.
Wesfarmers shares have had a far more interesting 12 months than the ASX 200 Index. Back in October, this ASX dividend share was riding high, and minted a fresh new all-time record of $95.18 a share.
But since then, Wesfarmers has come off the boil. Today, the ASX 200 industrial and retailing conglomerate and dividend share is going for $83.05 (at the time of writing). That's down a hefty 12.74% from the all-time high we saw just a few months ago.
Despite this share price dip, I still believe Wesfarmers will excel as a long-term investment.
Why this ASX dividend share is set to excel
The drop that we've seen over the past few months with Wesfarmers shares seems to have been a tacit acceptance that Wesfarmers shares might have run too high. Initial reactions were positive to the company's August full-year earnings, which showed revenues growing by 3.4%, and a 3.8% rise in underlying profits. Satisfactory numbers to be sure, but perhaps not enough to justify the near-37 price-to-earnings (P/E) ratio the company was trading at the time.
When Wesfarmers told investors in late October that "trading conditions remain challenging, with earnings impacted by subdued demand across the mining and resources sectors", investors may have gotten a little spooked.
But I think Wesfarmers remains a compelling long-term investment for the patient investor.
Wesfarmers has a long track record of delivering for its shareholders. Yes, its most profitable businesses – Bunnings, Kmart and OfficeWorks – are highly sensitive to broader economic conditions, and we should expect to see fluctuations in their financial health from year to year.
But Wesfarmers has shown that it has what it takes to survive when times are tough and thrive when the going gets better.
We can see this in action with Wesfarmers' dividend history. Between 2020 and 2025, Wesfarmers increased its annual dividend from $1.52 per share to $2.06. That's a compounded annual growth rate of 5.11%, well above the rate of inflation.
This is exactly what income investors look for on the ASX – passive income rises that grow in real value over time.
With the recent drop in Wesfarmers shares, the company's dividend yield is back to a respectable, if unimpressive, 2.5% or so. Of course, I don't think Wesfarmers shares are at a bargain-basement price today. But I think they still have a lot to offer for investors looking for a compelling long-term investment.
