If retirees are looking for an ASX blue-chip share to own in their portfolio for stability and strength, then Wesfarmers Ltd (ASX: WES) shares are a great pick for a few different reasons.
Wesfarmers is the name behind a number of leading retailers, including Bunnings, Kmart, Officeworks, and Priceline.
The business recently reported its FY26 half-year result, which included multiple positives that should be very appealing to retirees.
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Ongoing dividend growth
One of the things retirees may be most interested in is the passive income the business pays. That's what may pay for life's expenses, after all.
Wesfarmers' board of directors decided to increase the interim dividend per share by 7.4% with the HY26 report, which is considerably stronger than inflation and Wesfarmers' revenue growth.
The company generally tries to increase its payout alongside the net profit growth. Wesfarmers mentioned that its dividend is determined by available franking credits, current earnings, cash flows, future cash flow requirements, and targeted credit metrics.
Of course, there's much more to the appeal of a business than just the passive income for retirees. But the company's dividend growth looks positive. The forecast on CommSec suggests it could deliver an annual dividend per share of $2.16 in FY26, which would be a grossed-up dividend yield of 3.9%, including franking credits.
I'm expecting passive income growth to continue over the rest of the decade.
Strength of the retail businesses
The most important thing, in my eyes, is the financial performance of the business.
By some distance, the two most important divisions for the company are Bunnings Group and Kmart Group. While neither delivered huge growth, the numbers reported by both were very solid.
Bunnings Group revenue rose 4% and earnings increased 5%. Kmart Group revenue increased 3.2%, with earnings climbing 6.1% to $683 million.
Both businesses are benefiting from their leadership in their respective retail market segments, giving them pricing power and scale advantages to offer customers the lowest-cost items.
For Bunnings, it said sales grew across all product categories, regions, and customer segments. Kmart was "disciplined" with its pricing and inventory management in a competitive environment.
I'm also excited about the potential for Anko – Kmart's own brand of great-value products – to expand the store network in the Philippines from the single digits to something much bigger.
Rising profit margins
Not only is Wesfarmers' revenue climbing, but its earnings are growing faster thanks to steady improvements in its profit margins.
While revenue increased by 3.1% to $24.2 billion, the business also saw operating profit (EBIT) grow 8.4% to $2.5 billion and net profit after tax (NPAT) grow 9.3% to $1.6 billion.
When margins improve like that, it can lead to the bottom line growing faster than the top line (revenue). Usually, it's the net profit that investors value a business on. So, you can see how the rising profit margins can play an important role in shareholder returns.
Another sign of the company's improving quality for (retiree) shareholders was that the underlying return on equity (ROE) improved by 1.5 percentage points to 32.7%. This shows that the business is making a high level of profit on the shareholder money retained within the business. And the metric continues to improve.
With the Wesfarmers share price down 10% since 18 February (at the time of writing), this seems like a good time to invest.
