It's a good day to be a Coles Group Ltd (ASX: COL) shareholder. Not just because this S&P/ASX 200 Index (ASX: XJO) grocery giant is currently up by 0.33% at $18.02 a share. But because today is the day that shareholders will receive Coles' latest dividend payment.
As you might expect from an ASX blue chip with a mature business model, Coles is a strong dividend payer. During its last earnings report that was delivered in February, Coles announced its results for the six months ending 31 December.
This report card was something of a mixed bag. Coles reported a 1% increase in revenues, but higher costs ate into its earnings and profits, which fell by 4.4% and 2% respectively. However, the company also announced its interim dividend for the 2022 financial year.
This was a fully franked dividend worth 33 cents per share. That was flat on last year's interim dividend of the same value. The shares went ex-dividend for this payment on 3 March, meaning any investor who opened a Coles position on or after this date misses out on this dividend when it hits bank accounts today.
Even though today's dividend is flat on last year's interim payment, it does represent an increase on Coles' last final and fully franked dividend of 28 cents per share.
Together, these give Coles shares a trailing yield of 3.4% on current pricing. That's 4.86% grossed-up with that full franking.
Will Coles raise its dividend next year?
Since its float back in 2018, Coles has built a solid reputation as an ASX dividend share. This latest payout is actually the first time Coles hasn't delivered a year-on-year interim dividend increase. But perhaps dividend investors shouldn't despair just yet.
As we covered earlier this month, ASX broker Citi is still forecasting Coles will raise its final dividend for FY22 to 32 cents per share, which, at an FY22 total of 65 cents per share, would still mean Coles' annual dividends will keep rising. It's also pencilling in 72 cents per share in dividends in FY23, complete with a buy rating and a 12-month share price target of $19.30. That implies a share price upside of around 7.5% over the next year.
At the current Coles share price, this ASX 200 consumer staples share has a market capitalisation of $23.98 billion.
