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Coles Group Ltd (ASX: COL) shares often command the market’s attention. As its one of the S&P/ASX 200 Index (ASX: XJO)’s largest consumer staples stocks – boasting a market capitalisation of $23 billion – many market watchers likely wonder whether it’s worth buying.
But are Coles shares worth buying for the dividends alone? Let’s take a look at what experts think.
Right now, the Coles share price is $17.19.
Are Coles shares an ASX 200 dividend buy?
The Coles share price has outperformed that of Woolworths so far this year, falling 4% to the latter’s 9% tumble. That may have led some to consider the ASX 200 supermarket operator over Woolies.
That’s certainly the preference of broker Morgans. It recently said:
Trading on 20.6x [financial year 2023 forward price-to-earnings (P/E) ratio] and 4% yield, we continue to see [Coles] 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.
Morgans tips Coles shares to rise to $19.50, slapping it with a buy rating, my Fool colleague James reports. That represents a potential 13% upside.
Additionally, the broker expects Coles to pay out 64 cents of dividends per share this financial year and 66 cents per share next.
For reference, it offered shareholders 63 cents per share in financial year 2022, leaving it with a 3.66% dividend yield at the time of writing. That’s likely music to the ears of investors looking for growing dividends.
Comparatively, Woolies stock trades with a 2.63% yield right now. Both supermarket operators offer fully-franked dividends, meaning they can bring additional benefits to some investors come tax time.
Thus, a dividend-focused investor might favour Coles as the supermarket share to buy at the moment.
Though, it’s worth noting that Goldman Sachs tips Coles as a sell, placing a $15 price target on its stock. It prefers Woolworths shares.