It's fair to say that Australia's inflation pain has been most acutely felt in the aisles of the supermarket giants, Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW), and Metcash Ltd (ASX: MTS).
Many Australian consumers have felt taken aback by the level of price increases for everyday items.
Amid a public outcry over prices and profits, the supermarkets were heavily scrutinised in 2024.
There was much discussion about the high level of concentration and, thus, potentially uncompetitive nature of the supermarket sector, with Coles, Woolworths, and Metcash commanding 80% market share.
The Federal Government directed the Australian Competition and Consumer Commission to begin an inquiry into the supermarkets' pricing practices and the relationship between wholesale and retail prices.
The Supermarkets Inquiry 2024-25 will publish its report by 28 February.
The Federal Government also conducted its own inquiry into the fairness of supermarkets' payments to suppliers, such as farmers.
The Independent Review of the Food and Grocery Code of Conduct found there was a significant power imbalance between the supermarkets and suppliers.
It recommended making the voluntary code mandatory and introducing significant penalties for breaches to improve protections for growers and other suppliers.
Amid all this, all three supermarkets reported high profits in FY24.
Coles reported an underlying net profit after tax (NPAT) of $1,210 million in FY24, up by 4.1%.
Woolworths reported NPAT before significant items of $1,711 million, down 3%.
Significant items totalled $1.6 billion and were primarily related to an impairment in the New Zealand food business impairment and a mark-to-market loss on Endeavour Group Ltd (ASX: EDV).
Metcash reported an underlying NPAT of $282.3 million, down 8.2% due to lower hardware earnings and increased corporate costs.
In order to determine whether Metcash, Woolworths, or Coles shares delivered better returns for investors last year, let's examine their share price growth and dividend income.
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On share price growth, Coles shares outperform
Among the ASX supermarket shares, Coles outperformed Woolworths and Metcash, as this chart shows.
Not only did Coles outperform its peers, it was the only ASX supermarket stock to gain value in 2024.
The Coles share price increased by 17% to close out the year at $18.89 per share.
The Woolworths share price dropped 18% over the 12 months to finish at $30.49 per share.
The Metcash share price also declined in 2024. Metcash shares fell by 11% to close at $3.10.
By comparison, the market benchmark S&P/ASX 200 Index (ASX: XJO) rose by 7.49% in 2024.
On dividend payments, Metcash shares win
In 2024, Coles shares paid an interim dividend of 36 cents per share in March and a final dividend of 32 cents per share in September.
This totalled 68 cents in fully franked annual dividends for Coles shareholders.
Woolworths shares paid an interim dividend of 47 cents per share in April.
It also paid a final dividend of 57 cents and a special dividend of 40 cents per share in December.
This brought total annual dividends to $1.44 per share, partially franked.
Metcash paid an interim dividend of 11 cents per share in January and a final dividend of 8.5 cents per share in August.
So, Metcash shares investors received 19.5 cents in total annual dividends, with full franking.
So, in dollar value terms, Woolworths shares win.
But what about dividend yield terms, which are much more important to investors?
Based on the closing values on 31 December, Coles shares paid a dividend yield of 3.6%.
This compares to 4.7% for Woolworths shares and 6.3% for Metcash shares.
So, Metcash shares delivered the best income yield for ASX supermarket shares investors.
