Search ASX code:
Generic filters

Is Coles (ASX:COL) a quality ASX dividend share?

Could Coles Group Ltd (ASX: COL) be counted as a quality ASX dividend share?

As most readers would probably know, Coles is one of the largest supermarket businesses in Australia.

How good is the Coles dividend?

Coles hasn’t been its own separate entity for too long. It was split off from Wesfarmers Ltd (ASX: WES) at the end of 2018. There’s not much history to look at.

FY20 was a very disrupted year due to the COVID-19 effects. Coles decided to pay a total dividend per share of 57.5 cents. The only comparable growth was a 14.6% increase to the final dividend to 27.5 cents.

Based on the trailing 57.5 cents annual dividend, at the last traded Coles share price it has a fully franked dividend yield of 3.2%, or 4.6% including the franking credits. That’s a pretty solid yield in this era of ultra low interest rates.

In terms of defensive dividends, Coles is a solid option. We all need to eat after all. During that difficult COVID-19 lockdown period, Coles saw elevated levels of growth. Overall in FY20, Coles reported 6.9% growth of sales and 7.1% growth of net profit after tax (NPAT).

The COVID-19 growth will be hard to beat in the second half of FY21.

Strong growth in the FY21 first quarter

Coles said that it made a strong start to the 2021 financial year in the first 13 weeks. Total first quarter sales grew 10.5% with online supermarket business to customer sales increasing by 73%.

That growth should be good news for the FY21 first half profit and the dividend. A company’s board can only sustainably increase the dividend if it’s supported by profit growth.

Does the Coles valuation make sense?

Aside from these shorter term COVID-19 effects, I’m not sure that Coles is going to be growing by double digits. Its profit is linked to food inflation and population growth.

At the latest Coles share price it’s valued at 23 times the estimated earnings for the 2022 financial year, according to CommSec.

That looks pretty pricey in my opinion. There isn’t any international growth and I’m not sure where else Coles can generate earnings growth. However, compared just to cash then Coles is a decent option.

But there are plenty of other ASX dividend shares I’d rather buy such as Magellan Financial Group Ltd (ASX: MFG) and Brickworks Limited (ASX: BKW).

Afterpay, Zip Co, Sezzle…

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW or entering your email below.

Note: the report is 100% free.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Afterpay, Zip Co, Sezzle…

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW.

Note: the report is 100% free.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

Rask Media’s Ultimate BNPL Sector Report

Afterpay, Zip, Sezzle… is this the opportunity of a lifetime? Or is BNPL a ticking time bomb? This 7,500-word analyst report takes a deep dive into the BNPL sector and shines a spotlight on each of the major players in this booming market. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

As we emerge from COVID-19, some tech companies are growing faster than ever. Rask’s investment analysts have identified 3 growth stocks set to benefit. Big time.

Enter your email below to access this report for free, including the names, ticker codes and analysis.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.