Coles Group Ltd (ASX: COL) shares are not exactly flying under the radar.
The supermarket giant closed Friday's session at a record high of $24.41, which means investors are not being offered a bargain-basement price.
Even so, I think Coles shares could be worth buying with $10,000.
In an uncertain economic environment, I like the idea of owning businesses that sell products people keep buying. Coles has that defensive quality, and I think that can be valuable even when the valuation is not obviously cheap.
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Why Coles appeals to me
Coles is one of the most important retailers in Australia.
Its supermarkets sell food, household essentials, fresh produce, pantry staples, and everyday items that customers need in good times and bad. That does not make the business immune from pressure, but it does give Coles a more reliable demand profile than many discretionary retailers.
The company's recent third-quarter update showed that momentum is still solid. Supermarket sales revenue increased 4% to $9.8 billion, while comparable sales growth was 3.6%. Excluding tobacco, supermarket sales growth was 5.7%.
I think that is a useful sign. Customers are still shopping at Coles, and the company continues to focus on value, availability, loyalty, and online convenience.
The ecommerce side also looks encouraging, with sales increasing 24.8% and penetration rising to 13.6%. Grocery shopping is still a store-led category, but online ordering and delivery can add another driver of growth if Coles keeps improving the customer experience.
What about the valuation?
The challenge is price. According to CommSec, consensus estimates suggest Coles could generate earnings per share of 90 cents in FY26, 96.6 cents in FY27, and $1.12 in FY28.
At $24.41, that puts the shares on a price-to-earnings ratio of around 27 times FY26 earnings, 25 times FY27 earnings, and 22 times FY28 earnings.
That is not cheap. But I do not think every good investment needs to start with a low multiple. A defensive business with reliable demand, a strong brand, scale, and the ability to keep growing earnings can deserve a higher rating.
The important point is being realistic. Coles may not offer the same upside as a beaten-down growth share. But it can add stability, income, and exposure to essential household spending.
The passive income angle
Coles also offers a useful dividend profile. CommSec consensus estimates point to dividends per share of 75.5 cents in FY26, 82 cents in FY27, and 95.3 cents in FY28.
At the current share price, that implies forward dividend yields of around 3.1%, 3.4%, and 3.9%.
A $10,000 investment at $24.41 would buy about 410 shares. Based on those dividend forecasts, that holding could generate roughly $310 in FY26, $336 in FY27, and $391 in FY28, before tax and any franking credits.
That is not the highest yield on the ASX, but I think it is attractive when paired with Coles' defensive qualities.
Foolish takeaway
I think Coles shares are worth buying with $10,000, even at a record high.
The valuation means I would not expect explosive returns, and investors need to accept that they are paying up for quality. But I like the defensive nature of the business, the steady demand for groceries, the improving online channel, and the forecast dividend growth.
In a market where the economic outlook still feels uncertain, Coles is the type of ASX share I would be happy to own for the long term.
