1 ASX dividend stock down 22% I'd buy right now

It could be a great time to invest in this leading business.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The ASX dividend stock Wesfarmers Ltd (ASX: WES) has suffered a sizeable sell-off. Since 18 February 2026, it's down 18% (at the time of writing). It has also fallen 22% from August 2025, as the chart below shows.

It's rare for the ASX blue-chip share to fall more than 20% from a peak to trough.

Of course, the market pessimism makes sense right now – the Middle East is still a volatile situation, fuel prices have soared, inflation in some categories have jumped and the prospect of rising interest rates has significantly increased.

For a number of reasons, I think this is an appealing time to look at the owner of Bunnings, Kmart, Officeworks, Priceline and WesCEF (chemicals, energy and fertiliser).

Woman smiling with her hands behind her back on her couch, symbolising passive income.

Image source: Getty Images

ASX dividend stock credentials

One of the main things I like to see when it comes to a compelling passive income idea is growing payouts. Inflation is a negative for the value of a dollar, so I want to see growth over time to offset that effect.

Plus, I'd like to feel wealthier over time, so payouts that rise will help more money hit my bank account.

Wesfarmers has delivered regular dividend growth for investors over the last several years. Its payout has grown each year since 2020 after it split off the Coles Group Ltd (ASX: COL) business.

In the FY26 half-year result, Wesfarmers' board of directors hiked the interim dividend by 7.4% to $1.02 per share. That was comfortably above the rate of inflation, highlighting the strength of the company's ability to grow its dividend (alongside net profit growth).

One of Wesfarmers' stated goals is to increase its dividend for shareholders over time, alongside earnings growth.

According to the forecast on Commsec, the business is projected to pay an annual dividend per share of $2.16. That translates into a grossed-up dividend yield of 4.2%, including franking credits, at the time of writing.

Great time to invest

This is close to the best price that Australians can buy Wesfarmers shares in 2026, and also since mid-April 2025.

The lower the share price, the better the dividend yield and the lower the price/earnings (P/E) ratio.

This ASX dividend stock operates both Kmart Group and Bunnings Group, which both aim to provide consumers with great product prices. At times when households are feeling a financial pinch, this could see both businesses experience stronger demand and capture market share – that's what happened a few years ago and it could happen again.

Additionally, the WesCEF business could see increased earnings during this period if commodity prices stay elevated for an extended period.

So, not only is the Wesfarmers share price lower, but there's a good chance that the ASX dividend stock's profit couldgrow during this period.

At the current valuation and using the current forecast on Commsec, the Wesfarmers share price is valued at less than 27x FY27's estimated earnings. I think it's a good valuation to be greedy in buying shares of this business.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Smiling woman with her head and arm on a desk holding $100 notes, symbolising dividends.
Dividend Investing

Forget term deposits! I'd buy these ASX dividend shares instead!

These businesses have a lot to offer for income-focused investors.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

I'd buy 11,651 shares of this ASX stock to aim for $100 a month of passive income

This business can provide investors with an impressive level of dividends.

Read more »

ATM with Australian hundred dollar notes hanging out.
Dividend Investing

3 top ASX dividend shares for retirement income in 2026

These companies have strong market positions and offer yields of up to 11%.

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Dividend Investing

The ASX dividend stocks I'd buy for a retirement portfolio

For income-focused investors, consistency matters. These three ASX shares could help deliver that over time.

Read more »

Accountant woman counting an Australian money and using calculator for calculating dividend yield.
Dividend Investing

How much would I need to invest in ASX shares to earn $1,000 in passive income every month?

Here's a quick calculation for you to work out exactly what you'd need to invest.

Read more »

Three business people join hands in strength and unity.
Dividend Investing

The reliable ASX dividend shares I'd buy with $10,000

Building passive income starts with the right foundations. Here are three ASX shares I would consider today.

Read more »

Smiling man holding Australian dollar notes, symbolising dividends.
Bank Shares

Here's the dividend forecast out to 2028 for NAB shares

Can NAB shareholders bank on dividend growth in the coming years?

Read more »

Happy retirees celebrate with wine over lunch.
Dividend Investing

2 ASX dividend shares I'm betting on big-time to fund my retirement

I believe high-quality dividend stocks are worth their weight in gold.

Read more »