Is the Wesfarmers Ltd (ASX: WES) share price a buy today?
Wesfarmers has been one of the most surprising businesses in the ASX20 on the ASX in recent times with much activity it has done.
It has divested an enormous amount of assets like coal, Kmart Tyre and Auto and Coles Group Limited (ASX: COL) which has raised a lot of funds and freed up the balance sheet.
After being rejected by Lynas Corporation Ltd (ASX: LYC) a few weeks ago it's now trying to acquire Kidman Resources Ltd (ASX: KDR). Wesfarmers is certainly trying to put its reputation as essentially just a retail business behind it.
I certainly prefer the idea of Kidman over Lynas for Wesfarmers' portfolio of businesses. Kidman is interesting to Wesfarmers because it has a 50% interest in the Mt Holland lithium project based in Western Australia.
Not only would Wesfarmers hopefully benefit from the rise of electric vehicles but it can also take advantage of the Wesfarmers Chemicals, Energy and Fertilisers business' ability to design, construct, commission and operate complex chemical plants. Wesfarmers can also use its strong balance sheet to assist in the Mt Holland project as it goes into the next stage of development.
The rest of Wesfarmers is in a fairly good position. Bunnings continues to generate earnings before interest and tax (EBIT) growth, Officeworks is growing too, Kmart & Target are maintaining a high level of sales and the Industrials segment is solid.
It also owns large stakes of previously divested businesses such as Coles Group Limited (ASX: COL) and BWP Trust (ASX: BWP), which are likely to be deliver solid cashflow to Wesfarmers over the coming years.
As a whole, the Wesfarmers business is in a good position for the foreseeable future.
Foolish takeaway
Wesfarmers is trading at just under 20x FY20's estimated earnings with a projected FY20 grossed-up dividend yield of 6%.
I would definitely prefer owning Wesfarmers shares compared to the big ASX bank shares, but I think there are even better dividend shares out there.
