Here the Coles dividend forecast through to 2026

Coles Dividend Forecast: Sunny Skies or Storm Clouds? Analysts Weigh In

Coles Group Ltd (ASX: COL), Australia’s second-largest supermarket chain, is a popular choice for income investors seeking reliable dividends. But what can investors expect in terms of future dividend payouts? This article dives into analyst forecasts for Coles’ dividends through 2026, but remember, this is not financial advice. Before making any investment decisions, conducting your own research is crucial.

Dividend History and Payout Policy

Coles has a history of paying consistent dividends to its shareholders. The company typically pays dividends twice a year – an interim dividend in February and a final dividend in August. Coles also has a dividend payout policy of distributing 80% to 90% of its earnings to shareholders. This allows the company to invest in growth initiatives while rewarding investors.

Recent Dividend Cut

In February 2024, Coles announced a slight cut to its interim dividend, which came in at 36 cents per share. This was down from 38 cents per share paid in the previous corresponding period. The company attributed the decrease to softening profit margins in a competitive grocery market.

Analyst Forecasts: A Mixed Bag

Analysts have varying opinions on Coles’ future dividend trajectory. Here’s a breakdown of some key predictions:

  • Goldman Sachs: Analysts at Goldman Sachs expect Coles’ dividend to remain flat in the short term. They forecast a dividend of 64 cents per share for the full 2024 financial year (FY24) and a similar payout of 64 cents per share for FY25. However, they believe a rebound in profit margins could lead to a dividend increase of up to 72 cents per share in FY26.

Why Goldman Sachs is Cautious:

Goldman Sachs cites softening profit margins as a concern for Coles’ immediate dividend prospects. Increased competition from discount grocers and rising costs are putting pressure on Coles’ profitability.

A Glimmer of Hope:

However, Goldman Sachs acknowledges that Coles is implementing strategies to improve efficiency and drive sales growth. If successful, these measures could lead to a return to dividend growth in FY26.

The Market’s Take:

The recent dividend cut has caused some uncertainty among investors. Coles’ share price has experienced some volatility in recent months, reflecting this uncertainty.

Beyond Goldman Sachs: Other Voices

It’s important to note that other analysts might have different forecasts for Coles’ dividends. Investors should consider a range of perspectives before making investment decisions.

Important Considerations for Investors

When evaluating Coles’ dividend prospects, investors should consider several factors:

  • Coles’ Overall Financial Health: The company’s profitability and future earnings growth potential will significantly impact its ability to maintain and increase dividends.
  • Market Conditions: Competition within the grocery sector and broader economic trends can influence Coles’ performance and dividend payouts.
  • Company’s Dividend Policy: Coles has a history of prioritizing dividends, but this policy could change in the future if circumstances require it.

Investor Takeaway: Research and Diversification are Key

Analyst forecasts offer valuable insights, but they shouldn’t be the sole basis for investment decisions. Investors should conduct their own research, understand the risks and uncertainties involved, and consider their overall investment goals. Remember, diversification is crucial. Don’t rely solely on Coles or any single company for your dividend income stream.

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