Tesco share price: Analysts flag dividends at Britain’s biggest grocer

on Oct 2, 2017
Updated: Mar 11, 2020

Tesco (LON:TSCO) is scheduled to update investors on its interim performance on Wednesday and the Guardian reports that there is some suggestion that the company might start paying dividends again. The grocer’s results will come a little over three years after an accounting scandal rocked Britain’s biggest grocer.

Tesco’s share price has gained ground in London this morning, having added 0.48 percent to 188.05p as of 10:24 BST, largely in line with gains in the broader UK market, with the benchmark FTSE 100 index currently 0.62 percent up at 7,418.21 points. The group’s shares have added more than two percent to their value over the past year, but have given up just under 10 percent in the year-to-date.

The Guardian reported yesterday that there was some suggestion that Tesco could restart its payouts to shareholders as it continues with its recovery under chief executive Dave Lewis.

“Management has guided, through the Booker merger announcement, its intention to recommence dividend payouts in [2017-18],” Clive Black at Shore Capital commented, as quoted by the newspaper. “Our central expectation is that this would more likely than not to be a final payout but we shall watch with interest to see if a token is offered at the interim stage. Such a move would be welcome and express confidence.”

The newspaper further quoted analysts at Deutsche Bank as saying that they expected an interim dividend of 1.05p to be declared, representing 30 percent of their full-year expected dividend per share of 3.5p.

Analysts at Jefferies meanwhile expect Britain’s biggest grocer to unveil improved cash generation, good second quarter UK like-for-like delivery and a reiteration of its 3.5-percent to four-percent margin ambition.

In analyst news, Credit Suisse, which has an ‘underperform’ rating on Tesco, lowered its price target on the shares from 145p to 140p today. According to MarketBeat, Britain’s biggest grocer currently has a consensus ‘hold’ rating and an average price target of 188.25p. 

As of 10:55 BST, Monday, 02 October, Tesco PLC share price is 166.03p.