Insights

Are Coles (ASX:COL) shares a top option for ASX dividend investors today?

Is the Coles Group Ltd (ASX: COL) share price a buy for ASX dividend income investors today? I think it might be, and here’s why
The post Are Coles (ASX:COL) shares a top option for ASX dividend investors today? appeared first on Motley Fool Australia. –

The Coles Group Ltd (ASX: COL) share price hasn’t had a fabulous month and a half. Since making a fresh new all-time high of $19.26 on 14 August, Coles shares have slid to the $17.00 the company is asking at close of trade today. That’s a six-week slide of more than 10%.

But for ASX dividend investors, cheaper share prices mean higher dividend yields. So is this a buying opportunity for Coles shares today?

Coles shares’ crazy year

It’s certainly been a crazy year for the Coles share price. Just look at this visual representation:

Coles share price

Coles Group Ltd YTD chart and pricing data | Source: fool.com.au

We saw a big dip at the onset of the coronavirus pandemic, followed by some frenzied buying pressure when investors realised Coles was one of the only businesses experiencing booming sales amid the lockdowns. Then investors cooled off a bit when the broader market began to recover before another rally from June to mid-August.

The dip over the past 6 weeks has reversed some of these gains, but could this also indicate a buying opportunity?

What are Coles shares offering today?

On current prices, Coles shares are trading at a price-to-earnings (P/E) ratio of 23.28 and a trailing dividend yield of 3.37%, or 4.81% grossed-up with Coles’ full franking. That compares with the broader S&P/ASX 200 Index (ASX: XJO)’s current average P/E ratio of 17.81 and trailing dividend yield of 3.41%. That tells us that the market is placing a premium on Coles shares today. But is this justified? Well, I think Coles shares have a lot going for them today, especially if you’re a dividend investor.

In its August full-year earnings report for the 2020 financial year, Coles increased its final dividend to 27.5 cents per share, fully franked. That’s a 14.6% improvement to FY19’s final dividend and brings the total dividend from Coles in FY20 to 57.5 cents per share.

Foolish takeaway

A 3.37% dividend yield isn’t the largest offering on the ASX today. In contrast, Fortescue Metals Group Ltd (ASX: FMG) for example, is offering investors a trialling yield of 10.77% right now.

Even so, a company like Coles offers stability and defensiveness that few other ASX companies (especially Fortescue) can offer. Groceries and alcohol are household essentials for almost everyone (the former more than the latter) and Coles is one of the few places Aussies go to buy them.

This paradigm is consistent no matter the economic conditions or the impact of the coronavirus pandemic (as we saw in March and April). As such, I think Coles is a valuable share for any ASX dividend investor to have in their portfolio, and I think today’s pricing isn’t a bad offer at all.

These 3 stocks could be the next big movers in 2020

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Are Coles (ASX:COL) shares a top option for ASX dividend investors today? appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!