Should Wesfarmers (ASX: WES) Be on Your Hold List for the Rest of 2025?

When investors talk about Australian blue-chip companies, Wesfarmers (ASX: WES) is almost always in the conversation. Known for its strong portfolio of businesses—from Bunnings and Kmart to Officeworks, and more recently, chemicals and battery materials—the company has built a reputation as a steady performer.

As we move through the latter part of 2025, many investors are asking: Is Wesfarmers a stock to keep holding, or is it time to look for opportunities elsewhere? Let’s break down the latest numbers, the reasons to hold, and the potential risks that could shape the outlook.

Steady Performance and Dividend Growth

Wesfarmers’ FY25 results reinforced why the company is often called a bellwether for the ASX.

Revenue: $45.6 billion, up 3.47% year-on-year.

Underlying EBIT: $4.2 billion, an increase of 4.9%.

NPAT: $2.9 billion, up a strong 14.4% compared to FY24.

The growth was largely powered by the group’s retail divisions, especially Bunnings and Kmart, which continue to perform strongly despite a mixed consumer spending environment.

From a shareholder perspective, dividends remain a key attraction:

1. A fully franked final dividend of $1.11 per share, up 3.7% YoY, brought total FY25 dividends to around $2.06.
2. At the current share price, this equates to a yield of about 2.4%, offering consistent income in addition to potential capital gains.
3. On top of dividends, Wesfarmers proposed a further capital distribution of $1.50 per share (subject to shareholder approval), reinforcing its commitment to returning excess capital to investors.

This combination of dividend growth and capital returns makes Wesfarmers stand out as one of the most shareholder-friendly companies on the ASX.

Diversified Business with Solid Growth Engines

One of Wesfarmers’ greatest strengths is its diversification, which provides stability during uncertain economic conditions.

1. Bunnings: The powerhouse of the group, contributing about 43% of total revenue. Sales remain resilient thanks to productivity improvements, cost efficiencies, and an expanding store network. In times of economic slowdown, home improvement spending has historically held up well, making Bunnings a defensive asset.
2. Kmart Group and Officeworks: Both divisions delivered solid performances in FY25, driven by stronger digital platforms and better customer engagement. These businesses continue to innovate in e-commerce, ensuring they stay relevant in a highly competitive retail environment.
3. Chemicals & Fertilizers: This division is becoming increasingly exciting. The highlight of FY25 was the first production from Wesfarmers’ new lithium hydroxide refinery in July 2025. This gives the company direct exposure to the booming battery materials market, an area with long-term structural demand driven by electric vehicles and renewable energy storage.

This mix of defensive retail businesses and forward-looking industrial and resource exposure creates a balanced portfolio that appeals to both income-focused and growth-oriented investors.

Why Hold Wesfarmers Now?

With all of this in mind, there are several reasons why Wesfarmers deserves a place on your hold list through the rest of 2025.

1. Stability with Growth
   Even in a challenging consumer environment, Wesfarmers continues to deliver revenue and earnings growth. The combination of essential retail (Bunnings, Kmart) and new ventures (lithium refinery) offers both reliability and growth potential.
2. Dividend Reliability
   The company has a proven history of paying and growing dividends. Fully franked payouts backed by strong cash flow make WES attractive to income investors.
3. Capital Upside Potential
   The proposed $1.50 per share capital return adds to the total shareholder return profile. It also signals management’s confidence in cash generation and balance sheet strength.
4. Exposure to Battery Materials
   With the lithium hydroxide refinery now operational, Wesfarmers gains a foothold in a high-growth sector tied to electrification and sustainability trends.

Potential Headwinds and Risks

Of course, no investment is risk-free, and Wesfarmers faces its own challenges.

1. Consumer Spending Weakness: Higher interest rates and cost-of-living pressures could impact discretionary spending at Kmart and Officeworks. Even Bunnings could see slower growth if households tighten budgets.
2. Cost and Supply Chain Pressures: Rising wages, logistics costs, and global supply chain issues may squeeze margins, particularly in the retail divisions.
3. Execution in Chemicals & Fertilizers: While the lithium refinery is a promising asset, scaling production efficiently and ensuring strong demand uptake will be critical to success. Any delays or cost overruns could weigh on results.

These risks highlight the importance of monitoring quarterly updates and management commentary as the year progresses.

Market Sentiment and Valuation

Despite strong FY25 numbers, Wesfarmers’ share price has traded with modest volatility in recent months, reflecting a mix of optimism about growth and caution about consumer spending.

At current levels, the stock isn’t a bargain, but it is far from overvalued given its consistent earnings, strong cash flow, and shareholder-friendly policies. The dividend yield of around 2.4% may not seem high compared to some other ASX names, but when combined with capital returns and defensive business qualities, the total return outlook remains attractive.

Conclusion: A Solid Hold for the Rest of 2025

Wesfarmers isn’t the type of stock that’s going to deliver sudden, explosive gains. That’s not what it’s built for. Instead, it offers something arguably more valuable: steady earnings, reliable dividends, and measured growth opportunities.

For investors looking for dependable exposure to both essential retail and emerging industries like battery materials, Wesfarmers makes a strong case as a “hold” through the rest of 2025.

The company’s balance of stability, income, and long-term growth potential suggests that patience could pay off. With dividends growing, capital distributions on the horizon, and a lithium growth story just beginning, Wesfarmers remains one of the most compelling ASX bellwethers to keep in your portfolio.

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