Coles shares fell 13%. How's the dividend yield looking?

Résumé détaillé

Coles' pain could be income investors' gain. The post Coles shares fell 13%. How's the dividend yield looking? appeared first on The Motley Fool Australia.

Investors in Coles Group Ltd (ASX: COL) shares have certainly had a month to forget. Back in early October, this S&P/ASX 200 Index (ASX: XJO) consumer staples stock and venerated blue-chip share was well above $23 a share. On 23 October, Coles hit $24.55 a share. But just after, things started to get interesting.

Coles scheduled its latest quarterly trading update for 30 October. Even before then, it seemed like investors knew something was up, given the Coles share price drifted about 4.4% between 24 and 30 October. But when investors finally did get a look at Coles' results, the bottom fell out.

On the surface, it didn't look like there was much to be concerned about with these numbers. As my Fool colleague covered at the time, Coles reported group sales of $11.2 billion for its first quarter of FY 2027, up 2.2% on the prior corresponding quarter. Supermarket sales were up 3.6% to $10.3 billion, while Liquor sales dropped 1.3%. Pleasingly, online supermarket sales rocketed 22.9%.

However, it seemed Coles' lacklustre performance compared to its arch-rival Woolworths Group Ltd (ASX: WOW) was what really spooked investors. Woolies had, after all, just reported a 4.7% rise in group sales for the same quarter.

That might explain why Coles shares tanked a nasty 7.7% on the day this report came out. The selling continued afterwards, with the company hitting $21.25 a share on 4 November. Coles stock has recovered a little since, and is currently trading at $22.42 a share. Even so, it stands that Coles shares lost a horrid 13.4% between 23 October and 4 November.

Saying all of this, dividend investors might be picking up their ears at this news. As any good dividend investor knows, a lower share price means a higher starting dividend yield, if all else remains equal. And Coles, although not without its ups and downs, is renowned as a safe and stable investment. That's given its dominant position in the defensive consumer staples market.

Well, it certainly hasn't hurt.

At the 23…

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