It's fair to say that Coles Group Ltd (ASX: COL) shares weren't really worth owning over FY2023. Although we're still a few days from the end of the current financial year, Coles investors have enjoyed a return of around 2.8% from their Coles shares over FY2023 to date.
Compare that with the broader S&P/ASX 200 Index (ASX: XJO)'s return of roughly 7.7%, and we have a serious market laggard here, as you can see below:
To be fair, Coles shares have had a far better 2023 calendar year so far, being up more than 11% since the start of the year. But now we're just splitting hairs.
So let's now turn our focus forward rather than backward, and discuss whether this ASX 200 consumer staples share might be worth owning for the 2024 financial year.
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Are Coles shares an FY2024 buy today?
Well, at least one ASX broker thinks they are. As we covered earlier this month, the Coles share price was named as a buy by ASX broker Citi. The broker has given Coles a 12-month price target of $20.20. If realised, that would see investors enjoy a 10.5% gain from the $18.28 the Coles share price closed at yesterday.
The next 12 months obviously cover the vast majority of FY2024. But Citi reckons Coles will flourish beyond the next financial year as well. It is anticipating the supermarket operator to provide "solid earnings and dividend growth through to at least FY 2025".
In terms of dividends, Citi reckons Coles shares will yield 73 cents per share in fully-franked dividends for FY2024, up from 69 cents per share for FY2023. By FY2025, the broker reckons Coles will be forking out 80 cents per share. If this indeed comes to pass, it would push Coles' forward dividend yield on current pricing well over 4%.
Citi has also expressed its excitement over Coles' new automated distribution centre in Redbank, Queensland. It stated that this centre, and other automation advances, should benefit Coles' earnings starting in FY2025 and continuing from there.
So there is a lot to be excited about the Coles share price at its current level, at least according to this one ASX broker. Let's wait and see if Citi is on the money here.
