The Coles (ASX:COL) dividend climbed 6% in FY 2021

Coles was on form again in FY 2021…

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The Coles Group Ltd (ASX: COL) share price edged higher on Wednesday following the release of a full year result which revealed further earnings and dividend growth in FY 2021.

The supermarket giant's shares were up almost 2% at one stage before ending the day a fraction higher at $18.34.

How did Coles perform in FY 2021?

For the 12 months ended 30 June, Coles reported a 3.1% increase in sales revenue to $38,562 million. This was driven by the unwinding of local shopping and continued strength in Cole's online business. In respect to the latter, online sales grew 52% to $2 billion for the year.

Thanks to margin expansion, Coles' earnings grew at a quicker rate. The supermarket operator reported a 7.5% jump in net profit after tax to $1,005 million. This compares favourably to the consensus estimate of $998.2 million.

The Coles dividend

In light of this strong profit growth, the Coles dividend was given a boost in FY 2021.

The company's Board declared a fully franked final dividend of 28 cents per share. This brought the full year Coles dividend to 61 cents per share, which is up 6.1% from FY 2020.

Eligible shareholders can now look forward to receiving the final 28 cents per share dividend in around six weeks on 28 September.

Is the Coles share price in the buy zone?

According to a note out of Morgans this morning, its analysts still see value in the Coles share price.

The broker has retained its add rating and lifted its price target to $19.80. Based on the latest Coles share price of $18.34, this implies potential upside of 8% over the next 12 months.

As for the Coles dividend. Morgans expects the company to pay shareholders another ~61 cents per share fully franked dividend next year. This represents an attractive 3.3% dividend yield.

Motley Fool contributor James Mickleboro 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. 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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