There are a few ASX dividend stocks that have as defensive earnings as Coles Group Ltd (ASX: COL). The nature of its operations and the dividend record make it a truly impressive option.
As one of Australia's major national supermarket companies, it has a very important role in keeping the country fed. I'd say there are few businesses that have as resilient earnings as Coles.
While it may not be the cheapest retailer around, it offers households a number of advantages such as the large number of supermarkets with long opening hours. It also has an online offering which is seeing rapid growth. Let's dive into the company's appeal.
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Strong growth
Coles Group's impressive sales performance shows how the business is executing its game plan better than Woolworths Group Ltd (ASX: WOW).
In the first three months of FY26, the Coles supermarket division saw sales revenue growth excluding tobacco of 7% year-over-year. Inflation excluding tobacco was 1.2%, so clearly the company is doing a good job at selling more items.
Coles supermarkets delivered e-commerce sales growth of 27.9% to $1.3 billion, with e-commerce sales now representing 13.3% of overall sales, showing its increasing importance to the overall picture.
The ASX dividend stock noted that during that quarterly period, two new supermarkets were opened and three were renewed.
With Australia's population steadily increasing, combined with a little bit of underlying inflation for food items, I'm expecting Coles' revenue to continue rising over the long-term, even if it doesn't always outperform Woolworths as much as it is right now.
Broker UBS estimates that Coles could grow its revenue to $45.9 billion in FY26 and then reach $47 million in FY27.
Don't forget that Coles' Witron automated distribution centres should help significantly with efficiencies, boosting margins and stock flow.
ASX dividend stock credentials
Coles has increased its annual payout every year since 2019 – I prefer this steady approach to a dividend that bounces around. The company has shown how it can grow its payout in all types of market conditions during the last several years, making it an appealing business to own in any market.
If I'm relying on the cash payments, I'd want to see the dividend payout continue flowing reliably into my bank account, even in a downturn.
The broker UBS thinks the ASX dividend stock could hike its payout to 79 cents per share in FY26, which would be a grossed-up dividend yield of 5.3%, including franking credits, at the time of writing.
In FY27, the annual dividend per share could grow again to 93 cents per share, which would be a grossed-up dividend yield of 6.3%, including franking credits.
