How much is the Coles (ASX:COL) dividend worth today?

Is the supermarket giant a dividend buy today?

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The Coles Group Ltd (ASX: COL) share price is having a rather flat day today. At the time of writing, Coles shares are down 0.2% to $17.66 a share.

That’s a little better than what the S&P/ASX 200 Index (ASX: XJO) is managing today though. The ASX 200 is currently down 0.79% to 7,373 points after making a new all-time high yesterday.

But the Coles share price is also having a rather measly year in 2021 so far as well. Coles shares are down more than 4% year to date, and have fallen 0.7% over the past 12 months. That’s vastly underperforming the ASX 200, which is currently up 10.3% year to date, and 22.5% over the past 12 months.

But since the supermarket giant is well-known for being an ASX dividend share heavyweight, could this be good news for income investors? Lower share prices do mean higher starting dividend yields after all. So let’s check out what the Coles dividend has on offer today and find out.

What are Coles shares paying as dividends these days?

So, Coles certainly wins points for dividend consistency. Since its 2018 demerger from old parent company Wesfarmers Ltd (ASX: WES), Coles has been slowly but steadily jacking up its shareholder payments. 2019 saw Coles pay a final dividend of 24 cents a share, which was hiked to 27.5 cents in 2020 (yes, the year of the pandemic).

2020 saw Coles’ first interim dividend, a payment of 30 cents per share. This was also hiked to 33 cents a share for Coles’ 2021 interim payment.

Those last two dividends equate to an annual 60.5 cents per share dividend for the grocery giant. This gives the Coles share price a trailing dividend yield of 3.42% on the current share price of $17.67. Including Coles’ typical full franking, this grosses-up to 4.89%.

That’s not a bad yield objectively, especially considering the current near-zero interest rate environment. But what about the future?

A dividend buy today?

One broker who is bullish on Coles shares and its dividend is investment bank, Goldman Sachs. As of last month, Goldman rates the Coles share price as a ‘buy’, with a 12-month share price target of $19.40 a share, implying a potential upside of 9.8%.

Additionally, Goldman is estimating that Coles will continue to raise its dividend in the years ahead. It sees a potential dividend payout of 73 cents per share by the 2023 financial year. That would give Coles shares a forward yield of 4.12% on today’s prices.

At the current Cole share price, the company has a market capitalisation of $23.62 billion and a price-to-earnings (P/E) ratio of 22.53.

Should you invest $1,000 in Coles right now?

Before you consider Coles, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Coles wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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