Coles Group Ltd (ASX: COL) shares have had a fairly encouraging year so far in 2023. Since January, the Coles share price has risen by a healthy 11.1%, well outperforming the S&P/ASX 200 Index (ASX: XJO), which is up by 5% over the same period.
This continues a pattern that Coles shares have displayed ever since the ASX 200 consumer staples share first floated on the ASX in its own right back in late 2018. Since that time, Coles shares have risen from under $13 to the $18.27 we see today:
The Coles share price’s impressive performance over the past five years is one of the reasons that I think Coles is the perfect ASX 200 share for a first investment.
Here are two more reasons.
Why I think Coles is a perfect ASX starter share
A safe earnings base
No ASX share on the share market is truly ‘safe’. Even if a company’s profits and earnings survive and thrive during a recession or stock market crash, there is no guarantee that its share price will hold its value.
Saying that, if a company does manage to avoid a profit slump, then its share price will arguably have a better chance of recovering quickly compared to a more cyclical share.
It’s my belief that Coles falls into this bucket. Here, we have a company that sells food, drinks and other household essentials. We’re all going to need to continue buying these products regularly. As such, Coles is a company that could be described as a defensive share.
That defensiveness extends to inflation too, with Coles arguably one of the most inflation-resistant companies on the ASX. This all bodes well for a beginner investor, in my view.
Coles shares pay great dividends
Another reason new investors should consider Coles shares as a first investment is the company’s dividend history. Over the near-five years of its standalone ASX life, Coles has built up quite an impressive dividend track record. The company has increased its annual dividends every single year since 2019.
That year saw Coles fork out a total of 35.5 cents per share in fully-franked dividends. By last year, this annual total had reached 63 cents per share, fully franked. Indeed, Coles’ first dividend of 2023, the interim dividend of 36 cents per share, was another healthy rise over 2022’s corresponding payment of 33 cents.
Today, these dividend payments give Coles shares a decent trailing (and fully-franked) yield of 3.63%.
These consistent rises prove that Coles is able to slowly but steadily grow its earning base, and reward shareholders whilst doing so. Strong and reliable passive income is a great thing for a beginner investor in my view, as it reinforces the benefits of long-term compounding.
