The ASX dividend stock Coles Group Ltd (ASX: COL) has dropped around 15% since its peak in September 2025, as the chart below shows. I think the sell-off is a good opportunity to invest for the long-term.
Coles reported a number of growth figures in its FY26 first-half result. Total group sales revenue increased 2.5% to $23.6 billion and supermarket sales revenue grew 3.6% to $21.4 billion.
Total operating profit (EBIT) increased 10.2% to $1.23 billion and underlying net profit climbed 12.5% to $676 million. However, statutory net profit declined 11.3% to $511 million because of underpayment of wages to staff who were entitled to those amounts.
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ASX dividend stock credentials
The business has a very good dividend record over the years, and I think it's likely to continue delivering solid passive income.
Coles hiked its interim dividend per share by 10.8% to 41 cents per share. Not many large S&P/ASX 200 Index (ASX: XJO) shares are increasing the payout by more than 10%, yet the supermarket business managed it.
The projection from broker UBS suggests the business could pay an annual dividend per share of 77 cents. That translates into a grossed-up dividend yield of 5.3%, including franking credits.
UBS forecasts that the annual payout per share could climb each year between FY27 to FY30. It could reach 87 cents per share in FY27 and 91 cents per share in FY28. That looks like it could be steady, attractive progression to me.
Is the Coles share price appealing?
UBS called the ASX dividend stock a buy with a price target of $24.
The broker explained why:
Retain Buy rating due to Supermarkets (strong execution due to promotional effectiveness & cost leadership) and a now wider than average 1yr fwd P/E multiple gap with WOW (5.4x) post share price performance (-8.6% since FY25 result vs ASX200 +2.9%), and despite a challenged Liquor business.
We remain confident that execution & price trust favour COL (see UBS Research) due to promotional effectiveness (fewer, better), while recently delivered investments (e.g. Witron ADC [availability], Ocado CFCs [online]) provide cost leadership and confidence about CY26E sales growth.
I think Coles shares are a good buy for the long-term at this lower price, particularly because the net profit and dividend per share are both expected to increase every year for the foreseeable future. As long as its sales and bottom line keep increasing, then Coles can be a very good ASX dividend stock to own with defensive and growing earnings.
