When stepping into the world of investing, the stock market can feel like an ocean — deep, unpredictable, and overwhelming. Beginner investors often find themselves asking: Where do I start? Among the hundreds of companies listed on the Australian Securities Exchange (ASX), one name that consistently stands out for its stability and simplicity is Coles Group Limited (ASX: COL).

So, is Coles a good first investment? Let’s break it down.

Understanding Coles Group Limited

Coles Group is one of Australia’s biggest and most recognizable supermarket retailers. After its demerger from Wesfarmers in 2018, Coles emerged as a standalone company with a focus on essential household goods, liquor, and convenience. It operates:

Over 800 supermarkets

More than 900 liquor stores (under brands like Liquorland, First Choice Liquor Market, and Vintage Cellars)

Fuel and convenience outlets through partnerships

Its mission is simple: “To sustainably feed all Australians to help them lead healthier, happier lives.” This consumer-first strategy has kept Coles deeply embedded in the day-to-day lives of millions across the country.

Why Coles Is Ideal for Beginner Investors

1. Operates in a Defensive Sector

Coles belongs to the consumer staples sector — an industry known for its resilience. People need groceries, household essentials, and personal care items regardless of economic ups and downs. This makes the business less susceptible to market shocks compared to tech, mining, or discretionary sectors.

In tough times like recessions or pandemics, companies like Coles still thrive because they sell what people can’t stop buying.

2. A Simple and Transparent Business Model

As a new investor, you might find it difficult to grasp the complex operations of biotech or artificial intelligence firms. Coles offers a welcome contrast — it earns money by selling groceries, liquor, and essentials. That’s it.

This clarity is valuable for beginners, helping you focus on learning how the market works without being confused by technical jargon or complex business structures.

3. Reliable Dividends for Passive Income

Coles is known for paying consistent dividends, which is a major plus for first-time investors looking for steady income. Historically, Coles has delivered dividend yields in the range of 3.5% to 4%, with two payments made each year.

Even if the share price doesn’t swing wildly, dividend income offers a sense of reward and builds confidence over time — especially when reinvested for compounding returns.

Coles Group’s Financial Snapshot (H1 FY25)

Coles’ recent results for the first half of FY25 show why it remains a dependable player in the Australian market:

Revenue: $23.11 billion

Net Income: $576 million

P/E Ratio: 22.98

Return on Equity (ROE): 30.41%

Let’s unpack that.

Revenue growth reflects stable consumer demand across all segments, especially as Australians continue to shop both in-store and online.

Net income of $576 million indicates Coles is managing costs well despite inflation and supply chain challenges.

A P/E ratio of 22.98 suggests investors are willing to pay a fair premium for its earnings, confident in its stability and reputation.

A ROE of 30.41% is particularly impressive, highlighting that Coles is using shareholders’ capital efficiently and generating strong returns.

For a beginner, these numbers show strength without unnecessary volatility — something you’ll appreciate as you start building your investment journey.

Intangible Strength: Brand Power

Coles is not just any supermarket — it’s a brand deeply trusted by Australians. Whether it’s the familiar “Down Down” jingle or its commitment to fresh produce and affordable prices, the brand loyalty Coles enjoys is unmatched.

As an investor, especially a beginner, it’s often wise to start with companies you understand and use. Investing in Coles means investing in a brand you likely encounter every week — and that familiarity can go a long way in making you feel confident about your investment choices.

Risks to Consider

No investment is entirely risk-free. Coles, while stable, is not a high-growth stock. Its mature business model limits explosive returns. Competition from Woolworths (ASX: WOW), Aldi, and Costco also keeps margins tight. Furthermore, rising labor and logistics costs could impact profitability in the future.

However, these risks are common in the retail space and are generally well-managed by Coles’ leadership.

Final Investment Tip: Start Simple, Diversify Gradually

While Coles can be a great starting point, it’s important to diversify. Pairing Coles with growth stocks, ETFs, or other sector-leading companies can provide a balance of risk and return. Think of Coles as the “anchor” in your portfolio — something steady while you explore other investment opportunities.

Conclusion: Take Your First Step with Confidence

If you’re a beginner trying to make sense of the ASX, Coles Group Limited (ASX: COL) offers a clear and compelling case. With its steady cash flows, robust dividend policy, and essential nature of business, Coles gives you peace of mind as you begin your investment journey.

In investing, the hardest part is often the first step — Coles might just be the right one for you.