Wesfarmers Share Price Up on Results Release & Special Dividend

At time of writing, the share price of Wesfarmers Ltd [ASX:WES] is up 7.32%, trading at $35.12.

Overall it has been a decent 12-month period for the stock, with a 15.7% return for the year in the wake of the Coles Group Ltd [ASX:COL] demerger:

Wesfarmers Share Price

Source: tradingview.com

The latest news out of the company is its half-year results release and the announcement of a special dividend.

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Wesfarmers share price action suggests investors appreciate the dividend

Some highlights from the half-year results:

  • Record NPAT of $4.538 billion
  • Record NPAT includes demerger of Coles and disposals of Bengalla, Kmart Tyre and Auto Service and Quadrant Energy
  • NPAT from continuing operations up 10.4% to $1.08 billion
  • Net debt down $3.256 billion to $324 million
  • A special dividend of $1.00 per share (fully franked)

Commenting on its outlook, the company said:

‘[Wesfarmers] remains well-positioned for growth over the long term. Actions taken to reposition the portfolio have significantly strengthened the balance sheet and placed the Group in a strong position to deliver improved shareholder returns.

Other highlights include improved online sales, which grew by 34% and continued growth across Bunnings, Officeworks and the WesCEF business.

Earnings from Kmart and Target were more subdued with a 3.8% fall — slightly below last month’s guidance.

Coles demerger doing the trick for Wesfarmers

It appears the Coles demerger may be aiding the Wesfarmers share price as it is up 4% since the move.

As noted before, Wesfarmers shed a huge amount of its debt via the demerger and now can focus more closely on its core businesses.

Furthering this point, Bunnings now accounts for 58% of group earnings.

If you include the special dividend, the yield rises to around 9.3% — almost double what Coles could be offering with its 80–90% payout ratio.

As a stable stock that has the ability to avoid the retail carnage and pay a good dividend, it has its appeal.

Regards,

Lachlann Tierney,
For Money Morning

PS: Special 2019 report: The next generation of Aussie income super stars revealed. Hint: it’s not the banks. Click here to claim your copy now.


Lachlann Tierney is a writer for Money Morning and has been investing for nearly a decade. With an MSc from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently, he has been working with Phil Anderson and Terence Duffy. They have three publications:

Phil Anderson’s Time Trader
Cycles, Trends & Forecasts
Money Morning Trader


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