Owning Wesfarmers Ltd (ASX: WES) shares has been a smart long-term move, but the valuation has recently dropped, which could make it a great time to buy for passive income.
When share prices fall, it boosts the dividend yield on offer for prospective investors.
Looking at the recent Wesfarmers share price, it's down around 22% (at the time of writing) since 20 July 2026, as the chart below shows.
When such a high-quality business falls like that, I think investors can get excited about the opportunity on offer.
Let's take a look at what a $15,000 investment into the owner of Bunnings, Kmart and Officeworks could do for investors.
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Wesfarmers dividend projection
The business has steadily grown its annual dividend payout since its demerger of Coles Group Ltd (ASX: COL) several years ago, and the dividend growth is expected to continue in FY27.
In FY26, the Wesfarmers board of directors increased the annual dividend per share by 7.8% to $2.22.
In FY27, the company is projected to hike its annual dividend per share by another 7.9% to $2.395.
If that happens, it would translate into a grossed-up dividend yield of 4.7%, including franking credits, at the time of writing. That's not the biggest dividend yield on the ASX, but it's a solid start, and I expect plenty more dividend hikes are coming over the rest of the decade.
What passive income would a $15,000 investment create?
At the time of writing, if someone were to invest $15,000 into Wesfarmers shares, they would be able to buy 206 Wesfarmers shares.
With 206 Wesfarmers shares, the projected FY27 annual dividend payout would translate into $493.37 in dividend cash and $704.81 in grossed-up dividend income, including franking credits.
Of course, that'd just be year one. I expect the dividend income to increase in FY28, FY29 and in the longer-term.
Is this a good time to invest?
I think it's an appealing time to invest in Wesfarmers shares, particularly for a long-term investment. But interest rates and inflation could be a short-term headwind.
Analysts also seem to think the business is now offering decent value.
According to CMC Invest, 11 analysts have issued ratings on the business in the last three months. The average price target across those 11 ratings is $77.79, suggesting a possible 7% rise over the next year from where it is at the time of writing.
That's not suggesting huge gains over the next 12 months, but with the dividend added in, it could beat the return of the S&P/ASX 200 Index (ASX: XJO).
But other ASX shares could likely deliver returns greater than 7%.
