The Coles Group Ltd (ASX: COL) share price has been behaving rather strangely of late.
Coles shares have been on a pretty rewarding run over the last month or two. Since 22 May, Coles is up nearly 14%, whilst the S&P/ASX 200 Index (ASX: XJO) is up around 10% over the same period.
But before that, Coles shares appeared almost to be doing the opposite of what was happening with the ASX 200. Between 12 February and 19 March, Coles shares were essentially flat, albeit with a brief dip in between. Meanwhile, the ASX 200 lost around 32% over the same period.
But then, between 19 March and 22 May, Coles shares were down around 12% whilst the ASX 200 gained around 15%.
So what on earth is going on with the Coles share price?
Coles shares on a rollercoaster
I think the volatility we have seen in the Coles share price is a function of conflicting sentiment over the supermarket giant. In the depths of the coronavirus crisis lockdowns, Coles seemed like a safe haven. Widespread stories of panic buying of essential goods, and images of bare supermarket shelves, caused investors to flock to Coles shares whilst seemingly selling everything else in their portfolios. Some time after, investors probably realised that Coles wasn't going to enjoy this bounty forever. Furthermore, investors may have been starting to think that additional expenses associated with increased cleaning and safety measures would likely add to Coles' long-term costs.
And then, when the market recovery came, suddenly Coles looked boring and overbought. Investors seemed far more excited over growth shares like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P), which went on to deliver investors triple-digit returns over a month or three.
Are Coles shares a buy today?
Looking at the Coles share price today, and it's a mixed bag for me. At the time of writing, Coles is trading at $17.11, which gives the stock a price-to-earnings (P/E) ratio of 19.25 and a trailing dividend yield of 2.45% (or 3.5% grossed-up with full franking).
This looks at least 'fairly valued' to me. The primary attraction of a company like Coles is the dividend yield. And whilst Coles has one of the safest dividends on the ASX in 2020 in my view, I don't think 2.45% is anything to write home about. Yes, it's better than what (at least) half of the ASX big four banks are offering in 2020, but I think there are better income opportunities elsewhere.
Foolish takeaway
I think Coles is a useful ASX dividend share to have as part of an income-focused portfolio. Its defensive qualities and robust dividend do lend the share some advantages in the dividend-deprived year we are in. But for anyone who doesn't focus on income as the primary objective of investing, I think don't think Coles has too much else in its trolley to offer.
