Coles Group Ltd (ASX: COL) shares are a popular investment on the ASX. That’s understandable. After all, Coles is one of the most prominent businesses in the country, given that it runs the nation’s second-largest network of supermarket grocery stores.
Coles is, in my view, a relatively defensive company. It has a durable earnings base and a solid and reliable dividend track record. Despite this, the Coles share price has displayed significant volatility since it was listed on the ASX in its own right back in late 2018.
To illustrate, Coles shares have traded between $12.50 and $19 over the past five years. Today, the company is priced smack bang in the middle of this range. At the close of trading on Wednesday, it was asking $16.11 a share.
Take a look at all this for yourself here:
As we’ve covered before here at the Fool, I find Coles appealing for a number of reasons. This stock’s dividend track record, as well as its defensive nature, are two things I tend to look for in an ASX share.
But finding a quality company is only half the investment process. As the late great Charlie Munger once said, “No matter how wonderful a business is, it’s not worth an infinite price.”
So, what price would I be happy to buy Coles shares at today?
What price would make me buy Coles shares?
Well, when it comes to a dividend payer like Coles, I like to gauge an investing case by using the dividend yield. As any good investor knows, a company’s dividend yield has an inverse relationship with its share price.
Because of this relationship, in Coles’ case, we can use the dividend yield to determine what has historically been a good investment price.
Right now, Coles has a dividend yield of 4.1%, which includes full franking credits. That’s not bad, given that the company was trading at a yield of just 3.53% last June when it was at its last 52-week high of $18.70.
However, it’s not quite at a level where I’d be happy to buy. Coles’ current 52-week low is $14.82, which was hit back in October last year. At this price, Coles’ dividend yield would have been as high as 4.45%.
Now, I’m not waiting for Coles to get back to those levels. But I would become very interested if the company reached around $15 a share. At that price, investors could expect a dividend yield of around 4.4%.
Now, $15 might seem a long way from the current Coles stock price. But given this company’s volatile past, I wouldn’t be surprised to see it get back there at some point in the next year or two. And if it does, I might just have to buy some shares and hopefully secure a 4.4% dividend yield for my portfolio.
The post Here’s the Coles share price I would buy at appeared first on The Motley Fool Australia.
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More reading
- Broker says these ASX dividend shares are top buys
- 4 ASX income stocks to buy for 4% to 8% dividend yields
- Top ASX dividend shares to buy in May 2024
- 2 of the best ASX 200 blue-chip shares to buy in May
- Why Goldman Sachs just upgraded Coles shares
Motley Fool contributor Sebastian Bowen 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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