Is the Wesfarmers Ltd (ASX: WES) share price a buy?
The company has been operating for over a century and still has a focus on creating long-term returns for shareholders.
It has been a solid dividend ASX share for a long time and has been increasing its dividend as a way to reward shareholders. It also recently paid a special dividend.
Wesfarmers operates a variety of businesses including Bunnings, Kmart, Target, Officeworks and various industrial businesses. It also owns large stakes of spin-offs Coles Group Limited (ASX: COL) and BWP Trust (ASX: BWP). It's fairly retail focused.
Most recently the company has been looking to expand again in the resources space. It tried to acquire Lynas Corporation Ltd (ASX: LYC) and now it's in the process of acquiring lithium business Kidman Resources Ltd (ASX: KDR). There are useful synergies to be had between Wesfarmers and a resources business like Kidman.
With Coles out of the Wesfarmers business, the conglomerate is reaching new highs with the share price up to $37.75 at the time of writing.
With the recent Liberal Federal Election win, things could be looking up for several of Wesfarmers' businesses. The property sector might give Bunnings a boost if all of the commentary is to be believed. Officeworks, Kmart and Target could get a retail boost from the consumer if sentiment turns around.
Over the longer-term I think it would be best for Wesfarmers if it moved away from retailing, it's a tough industry.
Foolish takeaway
I don't think Kidman is the sole solution to Wesfarmers' future. I imagine there will be more acquisitions in the coming years which will provide further clarity for Wesfarmers' direction for us from here.
However, trading at 21x FY20's estimated earnings and a projected grossed-up dividend yield of 5.7%, I don't think it's the right time to buy Wesfarmers shares.
