The current economic environment witnessed increased volatility. However, certain growth stocks showed resilience. Some of these stocks that pay dividends rather surged and could be added to the portfolio.
Coles Group Limited (ASX: COL)
Coles Group Limited's third-quarter 2025 results show a strong sales momentum with a clear focus on value. The Group has reported total sales revenue of $10,379M reflecting a 3.4% increase compared to the previous year. Supermarket sales reached $9,401M up by 3.7%, while liquor sales increased by 3.4% to $813M. Other sales declined by 9.3% to $165M.
Coles has reported group sales of $23,035M for the half-year ending 5 January 2025, a 3.7% increase from the prior year. The underlying profit from continuing operations excluding significant items amounted to $666M. The company's focus on its core priorities led to an 8.9% growth in underlying EBIT.
Coles is focused on enhancing its customer value through price investment campaigns like "Great Value, Hands Down," and expanding its Exclusive to Coles product range. The group is simultaneously prioritizing digital capabilities as evidenced by significant eCommerce sales growth in both Supermarkets (22.6%) and Liquor (9.2%). Coles is also investing heavily in automation, data, and technology and including the development of automated distribution centers (ADCs) and customer fulfillment centers (CFCs) to improve efficiency and meet demand. the company signed a recent agreement to build a third ADC.
Coles declared an interim dividend of 37 cents per share fully franked. The company's results reflect a focus on managing costs with $157M in cost savings achieved through the Simplify and Save to Invest program. The focus of Coles' management remains on supplying a compelling customer value proposition, improving its fresh offerings, and customizing its product ranges to align with the specific preferences of local customers. They are also prioritizing the delivery of benefits from their investments in automation and optimizing their ADCs and CFCs.
Metcash Limited (ASX: MTS)
Metcash Limited is an Australian company focused on wholesale distribution and services to independent businesses. The company released its FY25 half-year results on December 2, 2024. Metcash has reported a 6.3% increase in Group Revenue that reached $9.6B. The Group's underlying EBIT remained relatively flat at $246.1M. Reported profit after tax increased slightly by 0.6% to $141.8M while the underlying profit after tax decreased by 5.5% to $134.6M. The company's diversified portfolio strategy is noted as a key factor in delivering these results amidst challenging external conditions.
Metcash operates across three main pillars: Food, Liquor, and Hardware. The Food segment showed strong earnings growth driven by the acquisition of Superior Foods and overall growth in Supermarkets and Campbells & Convenience. The Liquor segment demonstrated a strong sales performance and increased market share but experienced a slight decline in earnings. In contrast, the Hardware segment faced more challenging conditions with a softening in Trade activity impacting earnings, although market share was maintained.
Metcash acknowledges the challenging external environment particularly the impact of weaker Trade activity in the Hardware sector and cost of living pressures affecting consumer behavior. The company emphasizes that its diversified portfolio and initiatives will provide support to navigate these challenges and capitalize on future improvements in market conditions.
The company's focus on supporting independent retailers and adapting to changing market dynamics seems crucial to its resilience. While the Hardware segment faces challenges, the growth in Food and Liquor demonstrates the strength of Metcash's diversified approach.
(Source: Company Announcements)
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