Wesfarmers Ltd (ASX: WES) shares are outperforming today.
Shares in the diversified S&P/ASX 200 Index (ASX: XJO) conglomerate – whose retail subsidiaries include Bunnings Warehouse, Kmart Australia, Officeworks and Priceline – closed on Friday trading for $87.69. During the Monday lunch hour, shares are changing hands for $89.18 apiece, up 1.7%.
For some context, the ASX 200 is up 0.1% at this same time.
Taking a step back, Wesfarmers shares have gained 12.7% over the past 12 months, outpacing the 4.6% one-year gains delivered by the benchmark index. The ASX 200 stock notched a fresh all-time closing high of $94.76 a share on 21 August.
As for that passive income, Wesfarmers traditionally pays two fully franked dividends a year.
But, in the year just past, management announced a capital management initiative that saw shareholders receive an extra distribution of $1.50 per share. That came in the form of a fully franked special interim dividend of 40 cents per share and a capital return of $1.10 per share.
Eligible stockholders will have received both payments on 4 December.
Leaving the capital return out of the equation, Wesfarmers has paid out $2.46 a share in fully franked dividends over the last 12 months. That sees the ASX 200 stock trading on a fully franked trailing dividend yield of 2.8%.
Which brings us back to our headline question.
Image source: Getty Images
Should you buy Wesfarmers shares for the passive income on offer?
Bell Potter Securities' Christopher Watt noted that investors will find out what kind of passive income is on offer from Wesfarmers shares this Thursday, when the company reports its half year results (H1 FY 2026).
"The industrial conglomerate's interim results for fiscal year 2026 are scheduled to be released on February 19," he said (quoted by The Bull). "The results could serve as a positive catalyst, with growth most likely led by Bunnings and Kmart Group."
According to Watt:
Wesfarmers posted statutory net profit after tax of $2.926 billion in full year 2025, an increase of 14.4% on the prior corresponding period. While its valuation remains stretched, operating momentum and productivity investments in digital and supply chain capabilities support earnings resilience.
And Watt sounded a positive note on the value enhancing passive income the company has been paying to shareholders.
"Capital management initiatives – such as a payout of $3.56 a share that includes special distributions – further enhances total return," he said.
However, following on Wesfarmers' strong share price performance, Watt isn't ready to pull the buy trigger on the ASX 200 dividend stock just yet.
"The current valuation leaves a hold recommendation," he concluded.
