Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) are two of the most closely watched dividend shares on the ASX.
That is not surprising.
Supermarkets are defensive businesses, they generate large amounts of cash, and they sell products that households need in almost every economic environment.
But they are not identical investments. Their growth profiles, margins, valuations, and dividend outlooks can move in different directions.
So, how big could their dividends be in 2027?
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Coles dividend forecasts
Coles shares ended Monday at $21.53.
According to CommSec, consensus estimates are for Coles to generate earnings per share of 90 cents in FY26, 96.6 cents in FY27, and $1.12 in FY28.
On the dividend front, analysts are forecasting fully franked dividends per share of 75.5 cents in FY26, 82 cents in FY27, and 95.3 cents in FY28.
Based on Monday's closing share price, the FY27 forecast dividend of 82 cents per share would represent a forward dividend yield of approximately 3.8%.
That is not the highest yield on the ASX, but I think it looks respectable for a supermarket business with defensive qualities.
What I like about Coles is the simplicity of the story. It is a major grocery retailer with scale, brand recognition, and everyday customer traffic. In tougher economic conditions, households may cut back on discretionary spending, but grocery demand tends to be much more resilient.
The challenge is that supermarket margins can be thin. Wage costs, supply chain costs, competition, and price investment can all affect profitability.
But if Coles can keep improving efficiency, investing in its supply chain, and growing earnings gradually, I think the dividend has a reasonable path higher.
Woolworths dividend forecasts
Woolworths shares closed Monday at $33.50.
According to CommSec, consensus estimates are for Woolworths to generate earnings per share of $1.30 in FY26, $1.48 in FY27, and $1.64 in FY28.
Its dividend is also expected to grow. Consensus estimates point to fully franked dividends per share of 99.5 cents in FY26, $1.13 in FY27, and $1.28 in FY28.
Based on Monday's closing price, the FY27 forecast dividend of $1.13 per share would represent a forward dividend yield of approximately 3.4%.
That is slightly lower than the forecast yield for Coles, but I do not think income investors should look only at the headline yield.
Woolworths remains a high-quality defensive business with a strong market position. It has a large supermarket network, a significant customer base, and a digital and loyalty ecosystem that can help deepen customer relationships over time.
The business has faced its share of challenges, including pressure on margins, competition, and cost inflation. But I think its scale and brand strength remain valuable advantages.
If earnings recover as expected, the dividend could continue moving higher into FY28.
Which dividend looks better?
From a pure forecast yield perspective, Coles looks slightly ahead for FY27.
At current prices, Coles' forecast FY27 dividend yield is around 3.8%, compared with approximately 3.4% for Woolworths.
But I would not make the decision on that difference alone.
Both companies operate in defensive industries, both are expected to grow dividends over the next few years, and both could appeal to investors looking for steady income rather than high-risk yield.
The more important question is which business can deliver better earnings growth, protect margins, and manage cost pressures over time.
Foolish takeaway
Consensus estimates imply forecast FY27 dividend yields of about 3.8% for Coles and 3.4% for Woolworths.
Those yields may not be spectacular, but I think both shares can still have a place in an income-focused portfolio.
For investors who value defensive earnings, familiar brands, and the potential for rising dividends, Coles and Woolworths remain two ASX dividend shares worth watching closely.
