Hoping to pocket the biggest-ever Coles dividend? Here’s what you need to do

businessman handing $100 note to another in supermarket aisle representing woolworths share price

businessman handing $100 note to another in supermarket aisle representing woolworths share price

Coles Group Ltd (ASX: COL) shares could be in hot demand today as it’s the final day to grab the dividend.

Coles has been paying dividends for investors each year since it listed. It recently revealed its biggest-ever dividend payment to shareholders.

But, if investors aren’t quick they’ll miss out.

Coles dividend entitlement

The ex-dividend date for the Coles dividend is 2 March 2023. That means that buying shares on that date won’t come with the dividend entitlement. Therefore, 1 March 2023 is the last day to invest – that’s today.

If investors do own shares by the end of today’s trading, they’ll be entitled to the interim dividend of 36 cents per share. This payment represented a dividend increase of 9.1%.

This dividend is going to be fully franked, giving the investor the full tax benefit of franking credits.

In the Coles half-year result, it announced that the continuing earnings per share (EPS) had increased by 11.6% to 46.3 cents. This means that the profit grew quicker than the dividend, leading to a small decrease in the dividend payout ratio – Coles can re-invest more of its profit back into the business.

How was profit growth achieved?

Coles said that its continuing sales revenue increased by 3.9% to $20.8 billion. Some of this increase was driven by inflation, with Coles supermarkets seeing inflation of 7.4% for the half.

The reason there is a ‘continuing operations’ clarification is that Coles is selling the Coles Express business to Viva Energy Group Ltd (ASX: VEA).

Coles has been working on reducing its costs with its ‘smarter selling’ strategy. This has helped improve margins over the past 12 months.

Outlook

The Coles share price may have received a boost from the trading update for the first few weeks of the second half of FY23.

It said that Coles supermarket sales had returned to “modestly positive” volume growth from mid-January, while the liquor earnings are expected to return to growth in the second half as cycling against COVID-19 periods ends.

Coles also said that the smarter selling program will “continue to help partially offset inflationary cost pressures, headwinds in mark downs and stock loss, as a result of increasing theft.” It’s also working on large, automated warehouses to improve efficiencies in its supply chain.

Coles share price snapshot

Since the start of 2023, Coles shares have gone up by around 10%.

The post Hoping to pocket the biggest-ever Coles dividend? Here’s what you need to do appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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