How big will the Coles dividend be in 2023?

If you’re an income investor, then you may want to consider the Coles Group Ltd (ASX: COL) dividend.

That’s the view of analysts at Morgans, which currently have a buy recommendation on the supermarket giant’s shares.

Is Coles a share to buy?

According to a recent note, the broker has put an add rating and $19.50 price target on its shares.

Based on the current Coles share price of $17.16, this implies potential upside of almost 14% for investors over the next 12 months.

Morgans likes the company in the current environment due partly to its defensive qualities.

The broker also sees plenty of value in its shares at current levels and expects Coles to benefit from a reversal in consumer shopping trends post-COVID. The latter refers to shoppers returning back to supermarkets after shopping locally.

The broker commented:

[W]e continue to see COL as offering good value with the company’s solid balance sheet and defensive characteristics putting it in a good position to navigate through a weaker economic environment. The unwinding of local shopping should also help further market share gains.

What about the Coles dividend?

Morgans is expecting an attractive dividend yield from Coles’ shares in 2023.

The broker has pencilled in a 64 cents per share fully franked dividend for this financial year, which will be up modestly from 63 cents per share in FY 2021.

Based on the current Coles share price, this will mean a 3.7% yield for income investors.

Looking ahead, the broker expects the Coles dividend to grow again in FY 2024 and is forecasting a fully franked payout of 66 cents per share. This represents a yield of 3.85% based on today’s share price.

All in all, this could make Coles a good option if you’re seeking defensive options with attractive yields.

The post How big will the Coles dividend be in 2023? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 COLESGROUP DEF SET. 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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