Image Credit: Pexels

Investors monitoring the Australian stock market are observing intriguing dynamics in two major ASX blue-chip stocks – Wesfarmers Ltd (ASX: WES) and BHP Group Ltd (ASX: BHP). While Wesfarmers has witnessed a remarkable 15.8% surge in its share price since the beginning of 2023, BHP's share price currently stands 8% below its 52-week high. This brief exploration unravels the potential reasons behind these movements and why both WES and BHP might warrant a spot on your ASX blue-chip stock watchlist.

Wesfarmers Ltd (ASX: WES): A Flourishing Start to 2023

Wesfarmers, a diversified conglomerate, has captured investor attention with a robust 15.8% increase in its share price since the onset of 2023. As investors seek reasons to add stocks to their watchlists, Wesfarmers' performance prompts closer scrutiny.

WES Share Price Valuation: A Quick Glance

A fundamental metric to gauge the attractiveness of Wesfarmers shares is the dividend yield. Currently standing at around 3.63%, the dividend yield offers insights into the cash flow to shareholders. Notably, WES shares are trading below their historical average dividend yield of 3.84%, signaling a potential value proposition.

BHP Group Ltd (ASX: BHP): Navigating Market Dynamics

BHP, a stalwart in the natural resources sector, presents a different narrative. Despite a historical reputation as a reliable dividend-paying investment, BHP's share price is positioned 8% away from its 52-week high.

Insights into BHP Share Price Valuation

BHP's dividend yield, a key factor for income-seeking investors, currently stands at approximately 5.64%. A deeper analysis involves comparing this yield to its 5-year average of 9.38%. While BHP shares offer a dividend yield below historical averages, it's crucial to explore alternative valuation methods.

The Rask websites, particularly the Rask Education platform, provide valuable tutorials on Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). Leveraging these models could offer a more comprehensive understanding of the true value embedded in the BHP share price.

Why Consider Adding WES and BHP to Your Watchlist?

1. WES's Impressive Momentum: Wesfarmers' robust share price performance in 2023 signifies resilience and potential growth opportunities. As a diversified conglomerate, WES brings a mix of businesses to its portfolio, contributing to its appeal.

2. BHP's Dividend Potential: Despite the share price being below its recent high, BHP's historical reputation as a reliable dividend payer adds an income-generating element for investors. Exploring alternative valuation models can provide a nuanced perspective on the true worth of BHP shares.

In conclusion, both Wesfarmers (ASX: WES) and BHP Group (ASX: BHP) showcase distinctive characteristics that make them noteworthy additions to an investor's stock watchlist. Whether it's Wesfarmers' flourishing start to the year or BHP's dividend potential, investors should delve deeper into these opportunities to make informed decisions.