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).
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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.
