I'm considering 920 shares in this ASX 200 gem to aim for $50 a month in dividends

I'm eyeing off this dividend stock right now for its income potential…

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I am constantly looking for new ASX 200 shares to add to my ASX stock portfolio. In 2024, I have been eyeing one ASX 200 gem for its dividend income potential.

By my calculations, buying 920 shares of this ASX 200 gem would, at least in high likelihood, result in my portfolio receiving at least $607.20 in dividend income every year. That works out to be $50.60 every month.

This ASX 200 gem is none other than Coles Group Ltd (ASX: COL). Despite Coles having a presence in the Australian supermarket scene for decades, it has only been listed on the ASX in its own right since late 2018.

So why this stock for a dividend buy?

Well, the ASX shares that I love adding to my portfolio the most are those that offer inherent defensive qualities. It's nice knowing that the companies in your portfolio won't be at risk of a precipitous profit collapse, or indeed bankruptcy, if there is a major economic calamity. Coles fits that bill like a glove.

As a consumer staples stock, Coles sells goods that we need and cannot go without. In this case, that includes food, drinks, and other household essentials.

In good times and in bad, in times of high inflation and low, we all need to buy these things. And Coles is typically one of the cheapest places to obtain them. I don't envision any kind of scenario in the future where this wouldn't be the case.

That gives me great confidence in this company's profits and, in turn, dividends.

An ASX 200 gem that pays a big dividend

But let's talk about those dividends. My admiration of Coles partly stems from its record. Since its 2018 listing, Coles has consistently paid out fairly fat and fully franked dividends. The company has never cut its payouts and has actually increased them almost every year.

Over the past 12 months, shareholders have enjoyed a total of 66 cents per share in fully franked dividends from Coles shares.

If this continues (which is likely in my view given what we've just discussed, although not guaranteed), buying 920 Coles shares today would gift my portfolio that $607.20 in annual dividend income, or $50.60 every month. That works out to represent a compelling dividend yield of 3.63% at Coles' current stock price of $18.20.

$50 a month might not sound like a lot. But it's a darn good start, given that income is completely passive. And given Coles' dividend history, I think there's a good chance that this passive income stream will keep growing for the foreseeable future. I am hoping this ASX 200 gem will be part of my stock portfolio by the end of the year.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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