Almost all ASX investors who buy ASX dividend shares do so in order to receive a reliable stream of passive income.
After all, dividends can give us a source of secondary income, which we can use to reinvest into even more ASX shares, or else just use to pay bills.
If I were after a reliable ASX dividend share in June 2024, one option springs to mind: Coles Group Ltd (ASX: COL) shares.
Coles is a company we'd all be fairly familiar with. The company owns the second-largest grocery and supermarket chain in the country, as well as several other bottleshop businesses, including Liquorland and Vintage Cellars.
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Why is Coles a solid ASX dividend share?
Coles has most of the characteristics I look for in a solid, long-term passive income investment.
For one, it is a stable, mature business. This means that Coles has to spend very little, relatively speaking, on expanding its business, instead relying on past investments to collect its cash flows. Because of this, Coles can afford to allocate a significant chunk of its annual profits towards funding dividend payments rather than new stores, new employees or back-of-house infrastructure.
But Coles is also a consumer staples stock, meaning it can usually afford to pay out its dividends with remarkable consistency, regardless of the economic weather.
Many ASX dividend shares have to continually adjust their payouts depending on the health of the overall economy.
When there's a period of high inflation or a recession in the works, cyclical shares tend to have to deal with customers who are no longer willing to open their wallets as widely as they might have done when times were good.
Coles doesn't really have this problem. This company supplies life essentials like food, drinks and household goods. As such, its customers tend to keep walking through the door in good times and bad.
This means that Coles' earnings are relatively defensive and stable. That in turn makes the Coles dividend reliable.
We can see this in action if we look back at this company's past payouts. Since Coles was listed on the ASX in its own right back in 2018, it has always either maintained or increased its fully franked annual dividend.
Guaranteed passive income?
To illustrate, the company forked out an annual total of 35.5 cents per share in dividends back in 2019. The following year, investors were treated to 57.5 cents per share, rising to 61 cents per share in 2021. Bear in mind that this is over the worst years of the pandemic.
2022 saw Coles up its game again, forking out 63 cents per share in passive income. 2023 had the company increase this yet again to 66 cents per share.
Coles' last two dividend payments, worth 30 cents and 36 cents respectively, give the company a trailing dividend yield of 3.84% today. No ASX share can ever be relied upon for guaranteed dividend income. But I think Coles' track record makes it more reliable than most.
As such, I am confident that if one buys 2,000 Coles shares today, one could reasonably expect to receive at least $1,350 (a 3.84% yield) in annual passive income from this investment.
