Experts explain how you can make a 17% upside plus dividend income with Coles shares

how you can make 17% upside plus dividend income

ASX: COL, The shares of Coles Group Ltd are about to close this week in the red. The top supermarket player fell by 1%, bringing its shares down to $16.68 in its afternoon deal.

It implies that Coles shares have fallen by 10% within the past six months.

So Is it a good option to buy Coles shares?

Australia’s largest financial firm and broker, Morgans, thinks investors should consider Coles shares.

As per a recent update, their analysts have a price target of $19.50 and an add rating on their shares.

So if things move as planned, it looks as though the supermarket operator’s shares may ascend by around 17%.

However, that doesn’t mean that the returns will halt there. Coles follows up with a dividend policy that focuses on a 90% payout based on its revenue to shareholders every year.

For the Financial year 2023, Morgans anticipates a 64% wholly franked dividend being paid out on each share to the shareholders. Considering the current pricing, it sums up to an enticing 3.8% return rate.

The Good News is…

The good news is that Morgans feels confident about the company for various reasons. Some of these are;

  • An incredible balance sheet
  • Attractive figures for valuation
  • Defensive characteristics

They’re also anticipating a return to consumers’ previous shopping habits, indicating a positive move for the retailer.

Morgans explained it as follows:

“Trading on 20.6x FY23F PE and 4.0% yield, we 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.”

In conclusion, Morgans has drawn an understanding that Coles shares seem the ideal alternative for investors seeking defensive blue chips.

Overall, Morgans believes that Coles shares may be a top option for those looking for defensive blue chip investments.

- Published By Team Australia News

About the author

Team Australia News

Leave a Comment