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

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

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

I’d rather own these ASX dividend shares for passive income.

Read more »

Woman holding $50 notes with a delighted face.
Dividend Investing

I'd buy 4,730 shares of this ASX stock to aim for $200 a month of passive income

This investment offers Aussies a great passive income mix.

Read more »

Person with a handful of Australian dollar notes, symbolising dividends.
Dividend Investing

$1,000 buys 259 shares in this high-yield ASX dividend stock

The dividend payment is expected to keep climbing too.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Dividend Investing

Here is what this ASX energy giant is paying income investors in 2026

Woodside's dividend is one of the most watched on the ASX. Here is exactly what shareholders are receiving this year…

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

These ASX dividend stocks offer yields of up to 12%

Bell Potter rates these stocks as buys for income investors.

Read more »

A middle aged man holds a plumbing plunger in one hand and a piece of toilet pipe in the other, with an exasperated look on his face.
Dividend Investing

Buying Wesfarmers shares today? Here's the dividend yield you'll get

Wesfarmers is a perennial favourite for income investors.

Read more »

A woman wearing glasses and a black top smiles broadly as she stares at a money yarn full of coins representing the rising JB Hi-Fi share price and rising dividends over the past five years
Dividend Investing

Don't want to rely on your wage? Build a second income with these ASX shares

I think these businesses are great options for passive income.

Read more »

Man holding fifty Australian Dollar banknotes in his hands, symbolising dividends.
Dividend Investing

$1,000 buys 238 shares in an incredibly reliable ASX dividend stock

This business is consistently giving investors a dividend increase.

Read more »