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Wesfarmers vs Telstra shares: which dividend stock is better?
Looking to boost your passive income with ASX blue chips? Wesfarmers Ltd (ASX: WES) and Telstra Group Ltd (ASX: TLS) are two of the market's giants. Each is a household name, popular with Australian investors for their steady dividends and defensive businesses. If you're weighing up Wesfarmers vs Telstra shares for your dividend portfolio, here's how the two compare in 2026.
The case for Wesfarmers
Wesfarmers is one of Australia's oldest and largest companies. From its 1914 beginnings as a WA farmers' cooperative, it's grown into a diversified conglomerate spanning retail, office supplies, pharmaceuticals, and chemicals. Its subsidiaries include iconic names like Bunnings, Kmart, Officeworks, and Priceline. That means revenue is underpinned by everyday essentials, from hardware to health.
For fundamentals, Wesfarmers carries a hefty market cap of $82.64 billion, making it an ASX heavyweight. Its P/E ratio currently sits at 28.64, reflecting a market willing to pay a premium for its brand portfolio and reliability. The company's dividend yield is 3.06%, fully franked, with a dividend per share of $2.22. Notably, Wesfarmers has a well-established record of regular, fully franked dividends extending back decades, including occasional special payouts. However, its shares are down -7.77% year to date as of mid-September 2026.
The case for Telstra
Telstra is Australia's dominant telecommunications provider, with roots stretching back to the country's telecommunications beginnings. Today, Telstra runs core infrastructure and consumer businesses including ServeCo, InfraCo Fixed, Amplitel and Telstra International, all part of a 2022 corporate restructure. The company not only serves millions of Aussies but also has a global presence in 20 countries.
Telstra clocks in with a market capitalisation of $53.91 billion—smaller than Wesfarmers but still a major player by any measure. Its P/E ratio is 24.27, which is noticeably cheaper than Wesfarmers on current earnings. For income investors, Telstra is offering a higher dividend yield: 4.35%, mostly franked (90%+ in recent years). Its dividend per share stands at $0.21 and, pleasingly, Telstra's dividend growth has resumed after a long flat patch. Its shares are up a solid 3.49% year to date as of the latest data.
Valuation comparison
Here's how the numbers stack up side by side:
| Metric | Wesfarmers | Telstra |
|---|---|---|
| Market Cap | $82.64 billion | $53.91 billion |
| P/E Ratio | 28.64 | 24.27 |
| Dividend Yield | 3.06% (100% franked) | 4.35% (90% franked) |
| Dividend per Share | $2.22 | $0.21 |
| Year-to-date Return | -7.77% | +3.49% |
Wesfarmers is bigger and arguably more diversified, but you're paying a higher price for it, both in terms of P/E and a lower yield. Telstra, on the other hand, currently offers a much more generous dividend yield and is trading at a lower earnings multiple.
Recent share price performance
Share prices for both companies, as at mid-September 2026, tell an interesting story.
Wesfarmers shares have retreated from above $83 to $72.83 over the past three weeks. That translates to a loss of about 12% in less than a month. The broader 2026 year-to-date figure is also negative at -7.77%.
Telstra, by contrast, has been stable or slightly positive. In September, its price has hovered around the $4.70–$4.85 level, with occasional dips and rebounds. Telstra shares are up 3.49% for the year to date, showing relative resilience and steady investor support.
All prices and returns are as per the data provided, current to 15 September 2026.
Which is the better buy?
If I'm choosing for dividend income right now, my pick would be Telstra. The numbers are pretty clear: Telstra's dividend yield of 4.35% is comfortably ahead of Wesfarmers' 3.06%, and while franking isn't quite 100%, it's still generous for most Australian shareholders. Add to that its lower P/E ratio, indicating better value, and its positive share price momentum so far in 2026.
Wesfarmers is a quality blue-chip and has one of the best dividend records on the ASX, but you're currently paying a premium for its diversification and brand power. The lower yield and negative short-term return make it less attractive for pure income seekers. For yield-focused investors looking for relatively defensive income in 2026, I think Telstra is the more appealing buy out of the two right now.
