How much could $10,000 invested in Coles shares be worth in a year?

Do analysts think the supermarket giant could deliver big returns?

| More on:
A couple in a supermarket laugh as they discuss which fruits and vegetables to buy

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Coles Group Ltd (ASX: COL) shares are a popular option for investors.

Unfortunately, though, the supermarket giant hasn't been a great investment over the last 12 months.

During this time, the Coles share price has lost approximately 7% of its value.

This compares unfavourably to an 8% gain by the ASX 200 index over the same period.

But could things be different over the next 12 months? Let's see what a $10,000 investment in the company's shares could become.

$10,000 invested in Coles shares

With the Coles share price currently fetching $17.20, if you were to invest $10,000 (and a further $10.40), you would end up owning 582 units.

According to a recent note out of Morgans, its analysts think these units could be worth a lot more than you paid for them.

The broker currently has an add rating and $18.95 price target on Coles' shares, which implies potential upside of 10.2% from current levels.

This means that if your shares were to rise to this level, they would have a market value of $11,028.90.

Commenting on its bullish view on the stock, the broker said:

In our view, the ongoing scrutiny on the supermarkets has affected short term sentiment in the sector, which we believe creates a good buying opportunity in COL. While Liquor sales remain soft, we expect the core Supermarkets division (~92% of earnings) to continue to be supported by further improvement in product availability, reduction in total loss, greater in-home consumption due to cost-of-living pressures, and population growth.

Don't forget the dividends

The supermarket giant shares a decent portion of its profits each with its shareholders in the form of dividends. Morgans expects this trend to continue for the foreseeable future.

The broker is forecasting fully franked dividends of 66 cents per share in FY 2024 and then 69 cents per share in FY 2025. Based on its current share price, this will mean dividend yields of 3.8% and 4%, respectively, for investors.

If you assume this means a final dividend of 30 cents per share for FY 2024 and an interim dividend of 38 cents per share for FY 2025, this will lead to total dividends of 68 cents per share over the next 12 months.

This means that your 582 Coles shares will pay out fully franked dividends of $395.76 if Morgans' estimates prove accurate.

Combined with its capital gains, this boosts the value of your investment to $11,424.66, which represents a total return of approximately 14.1%.

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 has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Close-up of a woman waring a hay and smiling as she carries shopping bags over her shoulder.
Consumer Staples & Discretionary Shares

Why these ASX retail shares are surging while the market dives

These shares are avoiding the selloff. But why?

Read more »

A team in a corporate office shares a pizza while standing around a table chatting about the Domino's share price and Pizza Hut's threat to the business
Consumer Staples & Discretionary Shares

Down 10% in a month, is this the biggest ASX 200 bargain share right now?

With shares down 10% in a month, is this ASX 200 stock now a screaming bargain?

Read more »

A woman ponders over what to buy as she looks at the shelves of a supermarket.
Consumer Staples & Discretionary Shares

Have ASX investors missed their chance to buy Woolworths shares?

After a sharp recovery, Woolworths shares might not be on sale anymore...

Read more »

A woman holds a piece of pizza in one hand and has a shocked look on her face.
Consumer Staples & Discretionary Shares

Why are Domino's shares crashing 9% today?

Domino's is shutting up to 80 underperforming stores in Japan.

Read more »

Young happy athletic woman listening to music on earphones while jogging in the park, symbolising passive income.
Consumer Staples & Discretionary Shares

Why is this ASX 300 retail stock surging 7% today?

How did this footwear retailer perform in FY 2024? Let's find out.

Read more »

Confused African-American girls in casual clothing standing outdoors and comparing information on smartphones.
Consumer Staples & Discretionary Shares

4 reasons to buy GYG shares (and one reason to sell)

After a successful IPO, where to next for investors?

Read more »

Man smiling at a laptop because of a rising share price.
Consumer Staples & Discretionary Shares

Top broker slaps $33 price target on Guzman y Gomez (GYG) shares

One broker thinks the Mexican food business has spicy growth potential.

Read more »

A woman carries a stack of boxes along a street after a big day of shopping
Share Market News

Here's how the ASX 200 market sectors stacked up last week

Consumer discretionary shares led the ASX 200 market sectors last week with a 3.81% gain.

Read more »