Everyday investors weighing up Super Retail Group Ltd and Wesfarmers Ltd shares could find themselves facing a classic income-versus-stability puzzle.
Super Retail Group operates some of Australia and New Zealand's most recognisable retail brands, including Supercheap Auto, Rebel, BCF, and Macpac. According to its most recent public description, the group oversees more than 700 stores, plus online stores, and sources products internationally.
First, Super Retail Group's franked dividend yield comes in at a 5.28%, based on current data.
On the dividend front, Super Retail Group has shown a long history of consistent, franked dividends, with regular interim and final payouts, plus some special dividends in recent years.
Wesfarmers is one of Australia's largest conglomerates, with operations spread across retail, chemicals, energy, and fertilisers, among other sectors.
Its franked dividend yield is 3.03%—lower than Super Retail Group, but still respectable for a blue chip name. Its year-to-date return is -6.8%, meaning it's held up better than Super Retail Group across recent volatility, though it's still down for the year.
Wesfarmers' P/E is higher than Super Retail Group's P/E, meaning you're paying a larger multiple for each dollar of earnings. As for dividends, Super Retail Group is hands-down ahead on headline yield, and both companies offer franked payouts.
Of course, Wesfarmers offers scale, diversification, and stability that you just don't get with a smaller, focused retailer like Super Retail Group.
Right now, Super Retail Group's high, franked dividend yield and modest P/E ratio tip the scales for me, as long as you're comfortable with some short-term volatility.