Coles (ASX:COL) Surges in 2025: Why Consumer Staples Stay in the Spotlight

April 29, 2025 03:13 PM AEST | By Team Kalkine Media

Coles (ASX:COL) Surges in 2025: Why Consumer Staples Stay in the Spotlight — Image source: Shutterstock

Coles' Long-standing Presence

Founded in 1914 in Victoria, Coles has been a key player in Australia’s retail industry for over a century. After being owned by Wesfarmers between 2007 and 2018, it returned to independent public listing on the ASX under the ticker (ASX:COL). Today, Coles’ core business revolves around supermarkets, complemented by brands like Liquorland, First Choice, Vintage Cellars, Coles Express, and the loyalty program flybuys. As one of the prominent ASX consumer stocks, Coles continues to be a major force in shaping Australia's consumer landscape.

Holding roughly 28% of Australia’s grocery market, Coles stands strong next to its larger rival Woolworths Group Ltd (ASX:WOW), and remains recognized for offering dependable dividends to shareholders.

The Enduring Allure of Consumer Staples

The consumer staples sector is often sought after for its resilience during different market cycles. The S&P/ASX 200 Consumer Staples Index (ASX:XSJ) has returned a modest 0.59% annually over the past five years, underperforming the broader S&P/ASX 200, which averaged 7.69% per year. However, it’s the defensive characteristics of this sector that continue to make companies like Coles appealing.

Consumer staples businesses offer everyday essentials that people need regardless of economic conditions. This constant demand tends to make them more stable during downturns when compared to more cyclical sectors like resources or discretionary retail.

Dividends and Stability

Coles has maintained an average dividend yield of 3.76% annually over the past five years. The company’s ability to deliver reliable dividend income reflects the underlying strength of its business model, focused on non-discretionary spending needs.

Currently, Coles' dividend yield sits around 3.18%, slightly below its 5-year historical average. This shift largely stems from the share price appreciation seen so far in 2025, rather than any notable decrease in dividend payments — in fact, Coles' most recent dividends exceeded its 3-year average, showing a pattern of growth.

Beyond dividend income, Coles' stability is further underpinned by its significant market share and pricing power, qualities that reduce earnings volatility and enhance its defensive appeal.

Final Thoughts

The current performance of Coles Group Ltd (COL) reflects the broader strength and resilience of Australia's consumer staples sector. As economic uncertainties continue to surface globally, the stability and consistent cash flow offered by such companies keep them firmly in the spotlight for many investors seeking dependable long-term options.

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