The share price of dividend-paying supermarket operator Woolworths Group Ltd (ASX: WOW) has underperformed the broader S&P/ASX 200 Index (ASX: XJO) so far this year.
The stock has dumped around 13% since the start of 2022, while the ASX 200 has slumped 8%. Right now, the Woolworths share price is trading at $33.48.
Could its recent downturn make Woolworths shares a dividend buy? Let's see what experts think.
Are Woolworths shares a dividend buy?
Well, that depends on who you ask.
Top brokers Goldman Sachs and Citi are both bullish on the stock, despite being disappointed by its recent first-quarter earnings.
Woolworths posted a 1.8% increase in group sales for the three months ended 30 September, coming in at around $16.4 billion.
Its key Australian and New Zealand food businesses underperformed despite inflationary effects. Though, their slump was offset by growth in the company's Big W and business-to-business sectors.
Goldman Sachs commented:
Despite a noisy and softer [first quarter], we remain confident that [Woolworths] is the superior operator within [Australian] supermarkets.
Both Goldman Sachs and Citi trimmed their price targets for Woolworths shares on the back of the update, reducing them to $41.70 and $39.50 respectively, my Fool colleague James reports. Though, that still represents a potential upside of 18% to 24%.
Comparatively, Morgans is decidedly more bearish.
The broker dropped its price target on the stock to $34.10 and retained its hold rating on the back of the supermarket giant's recent release. It said:
[W]e continue to see the stock as fully valued and continue to prefer Coles Group Ltd (ASX: COL) in the Staples sector.
Speaking of Coles, its dividends far surpass those offered by its larger peer. It's currently trading with a dividend yield of 3.8%, having handed investors 63 cents per share in dividends in financial year 2022.
That's superior to the 2.7% yield currently on offer from Woolworths shares. It paid out 92 cents per share in dividends last financial year.
Thus, a dividend-focused investor might prefer Coles shares over Woolworths right now.
