Best buy for dividends today: Coles or Woolworths shares?

Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) are two ASX 200 blue-chip shares that can be found in the portfolios of many a dividend investor in Australia.

Income seekers like the sturdy business models that both of these companies offer, thanks to their defensive nature as consumer staples providers. Both Coles and Woolworths are established and highly profitable, which gives both stocks a durable earnings base from which to fund what have historically been reliable passive income to shareholders.

Saying all of that, both Coles and Woolworths shares have been through some dramatic changes over the past 12 months. One at the expense of the other, as it happens.

Today, let’s review both stocks’ dividends and determine which one appears to be the better buy for income investors at present.

Coles vs. Woolworths shares: Which is the better dividend stock?

Well, let’s start with the payouts.

Coles sent out its normal two dividends in 2025. The first came in March, the interim dividend worth 37 cents per share. The second was the final dividend from September, worth 32 cents per share. Both payments came fully franked, as is typical for Coles. Together, the payments represent a payout ratio of 85.4% of earnings.

Coles’ 2025 dividends came in ahead of 2024’s payout. Although the final dividend was flat year on year, the interim dividend was boosted by one cent compared to 2024’s equivalent payout of 36 cents per share.

Today, these 2025 dividends give Coles a trailing dividend yield of 3.06%.

In 2025, Woolworths also doled out two dividends, as is the company’s habit. The first was the April interim dividend worth 39 cents per share. The second, the final dividend from September worth 45 cents per share. Both payments came fully franked and represented a payout ratio of 74.1% of earnings.

Unlike Coles’ payouts, though, these dividends from Woolworths shares represented significant reductions over the income shareholders banked in 2024. That consisted of an interim dividend of 47 cents per share and a final dividend worth 57 cents per share. There was also a special dividend of 40 cents per share paid out. However, that was funded from the one-off sale of Woolworths’ last 5% stake in Endeavour Group Ltd (ASX: EDV), so it isn’t worth including.

Today, Woolworths’ stock is trading on a dividend yield of 2.97%.

Foolish Takeaway

If I had to choose between Coles and Woolworths shares for dividend income today, I would probably opt for Coles. Not just because it offers a slightly higher yield, though. Woolworths is currently in a bit of a funk, evident from its recent share price trajectory. The company’s management is facing questions about the direction it is taking, and it has been steadily losing market share to Coles in recent quarters. Its Big W division also continues to weigh on its overall strength.

Meanwhile, Coles has a far better track record of delivering consistent dividends in recent years, despite its higher payout ratio. As such, it would be my pick of the two right now.

The post Best buy for dividends today: Coles or Woolworths shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Endeavour Group. 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 Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.