The Australian Age Pension is one of the most generous in the world, but there are a few high-yield ASX dividend stocks I'd rather rely on for income, such as Wesfarmers Ltd (ASX: WES) shares.
Some businesses look very appealing to me as options because of their strength and their ability to deliver passive income growth that's stronger than inflation.
Wesfarmers is best known as the owner of Kmart Group, Bunnings Group, and Officeworks.
When it comes to the Age Pension, we're talking about approximately $28,600 annually from the maximum basic rate for a single person.
With that target in mind, let's take a look at the potential dividend income from the high-yield ASX dividend stock I want to highlight.
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Dividend projections
The most important metrics that investors may want to know relate to the dividend.
I'm going to look at analyst projections for Wesfarmers for the 2026 financial year.
According to CommSec's projection, the high-yield ASX dividend stock is forecast to pay an annual dividend per share of $2.16 in FY26.
If the company does pay that dividend, it would represent year-over-year growth of close to 5%, which I'd describe as a solid increase.
At the time of writing, the current Wesfarmers share price could yield approximately 4.2% grossed-up, including franking credits. In my view, that's a great starting point, and the business could continue hiking its annual payment in the coming years.
Currently, the projection on CommSec implies the high-yield ASX dividend stock could grow its FY27 payout by 7.9% to $2.33 per share – much stronger growth than inflation. This would be, at the time of writing, a grossed-up dividend yield of more than 4.5%, including franking credits.
I should also note that the business is expected to continue a healthy dividend payout ratio, giving a healthy balance between rewarding shareholders and investing for growth. The projected dividend payout ratio is around 85% for FY26.
How many Wesfarmers shares are needed?
To generate $28,600 of annual grossed-up dividend income (including franking credits), an investor would need 9,269 Wesfarmers shares.
That would be a major investment, so I'd strongly encourage investors not to put all of their portfolio money into Wesfarmers shares. Diversification is important for a dividend portfolio.
Why I'd buy Wesfarmers shares for passive income
I'd describe Kmart and Bunnings as two of the best businesses in Australia, and this high-yield ASX dividend stock owns both of them. They're market leaders in their respective retail categories, offer consumers great value, and generate high returns for shareholders (including a strong return on capital (ROC)).
The company has shown a willingness to change its business portfolio and invest in new industries that have a compelling, long-term future, including lithium mining and healthcare. I think it's moves like this that will help the business deliver a lot more growth than the Age Pension over the rest of the decade.
Wesfarmers has an ultra-long-term track record of strong performance, and I'm confident that it can continue for the foreseeable future. It's one of the leading large ASX dividend shares to own, in my view.
