Since its spin-off from Wesfarmers Ltd (ASX: WES) back in late 2018, Coles Group Ltd (ASX: COL) shares have been a popular choice for investors seeking large, stable, and fully franked dividends.
Coles ticks many, if not most, of the boxes that income investors look out for in a dividend stock. It is a mature company with an established market presence across Australia, and has carved out a defensible position as the clear second player in the grocery and supermarket sector.
That in itself is also a drawcard. As an established consumer staples stock, Coles specialises in products like food, drinks, and household essentials that we tend to need to buy. This means that Coles is inherently resistant to economic maladies like inflation and recessions.
So Coles offers up what most ASX dividend investors are looking for in an investment. But let's get down to what kinds of income one might actually expect from buying Coles shares today.
At the time of writing, Coles is trading at $23.52 a share, down a rather potent 2.06% for the day thus far. At this price, the company is trading on a trailing dividend yield of 3.1%.
That yield comes from the last two dividends that this company has doled out. The first of those was the final dividend from September last year, worth 32 cents per share. The second, the interim dividend that shareholders bagged in March, worth 41 cents per share. As we've already established, both payments came with full franking credits attached.
That 12-month total of 73 cents per share gives us that 3.1% yield at the present share price.
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Will Coles shares keep dividend investors happy?
But this yield is just a trailing one, and tells us only what Coles has paid out in the past, not what it might yield if one buys the shares today.
Of course, no one can predict a company's future payouts with certainty until the company itself tells us what to expect. Coles does have a strong track record, having delivered an annual dividend pay rise every year since its ASX float. But again, that does not guarantee future rises.
Fortunately for investors, analysts are optimistic when it comes to how much the company might pay out in the years ahead.
As my Fool colleague Tristan covered earlier this month, analysts at CMC Invest are pencilling in a 12-month total of 77.7 cents per share for FY2026. That rises to 85.2 cents per share for FY2027, and then all the way to 91 cents per share in FY2028.
That would indicate forward yields of 3.3%, 3.62%, and 3.87% respectively. If accurate, this would be very good news for Coles investors indeed. Let's see if the company measures up to these optimistic expectations.
