Coles Group Ltd (ASX: COL) shares are on course to end the week in the red.
In afternoon trade, the supermarket giant's shares are down 1% to $16.68.
This means the Coles share price is now down 10% over the last six months, as you can see below.
Image source: Getty Images
Should you buy Coles shares?
One leading broker that thinks investors should be buying Coles shares is Morgans.
According to a recent note, its analysts have an add rating and $19.50 price target on its shares.
This suggests that the supermarket operator's shares could rise by 17% if everything goes to plan.
But the returns won't stop there. Coles has a divided policy that aims to pay out up to 90% of its earnings to shareholders each year.
Morgans expects this to result in a fully franked dividend of 64 cents per share being paid to shareholders in FY 2023. This equates to an attractive 3.8% dividend yield at current prices.
Why is it positive?
Morgans is positive on the company for a number of reasons. This includes its attractive valuation, defensive qualities, and strong balance sheet.
The broker also expects a reversion in consumer shopping habits to be a positive for the retailer. It explained:
Trading on 20.6x FY23F PE and 4.0% yield, we continue to see COL as offering good value with the company's solid balance sheet and defensive characteristics putting it in a good position to navigate through a weaker economic environment. The unwinding of local shopping should also help further market share gains.
All in all, Morgans appears to believe that Coles shares could be a top option for investors looking for defensive blue chips.
