Should I Buy Tesco Shares?
In this article, we examine the prospect of investing in Tesco, highlight the recent Tesco dividend history, provide a Tesco share price forecast and much more! So, if you are looking for an answer to the question ‘are Tesco shares buy or sell’, keep reading!
Table of Contents
Investing in Tesco
Tesco is a UK supermarket chain which is listed on the London Stock Exchange and is a constituent of the FTSE 100. Tesco operates in the UK, Ireland, Czech Republic, Hungary and Slovakia – although it is in the UK where the company generates the majority of its revenue.
Tesco is the leading supermarket chain in the UK, with a market share of approximately 27%. In Ireland, it is the second largest supermarket in terms of market share, accounting for more than 23% of the market.
Tesco Shares Buy or Sell
In order to help you find an answer to ‘should I buy Tesco shares’, in the following sections, we will highlight the buy and sell cases for Tesco.
Buy
Tesco shares have been performing well of late, significantly outperforming the FTSE 100 over the past year and the supermarket posted positive results for the year ending 24 February 2024, with sales and adjusted operating profit climbing 7.2% and 12.7% respectively.
One of the buy cases for Tesco shares is its dominant position in the UK market which, amongst other things, allows it to benefit from economies of scale. It has successfully maintained its market leading position despite increased pressure from low-cost rivals Aldi and Lidl.
In fact, Tesco’s market share has remained relatively consistent since 2017, whilst the other ‘big four’ supermarkets – Sainsbury’s, Asda and Morrisons – have all yielded ground to the aforementioned low-cost competitors.
The supermarket’s ability to fend off rivals with initiatives such as its Aldi price match programme bodes well for the future of Tesco stock. Although competition does remain a significant risk.
Its Clubcard programme, which has 22 million customers, has also been successful at retaining customers, saving them money on their shopping whilst allowing Tesco to leverage the data collected to optimise its services.
The supermarket also has a decent capital returns programme. As well as paying dividends, which we will look at in more detail later, it has also had a share buyback programme since 2021 and recently committed to repurchase a further £1 billion by April 2024. This will take its total share repurchases to £2.8 billion since buybacks were initiated.
Sell
Nevertheless, it is not all positive for Tesco.
Just because it has, until now, successfully fended off competition from its rivals, does not mean it will continue to do so.
The supermarket industry is highly competitive. As there is not a huge amount of difference between different chains and the products they sell, there is not a high degree of consumer loyalty.
Many shoppers will simply go wherever they can get the best deals, something which has become more pronounced over the last couple of years given inflation and higher interest rates. This leads to intense price competition between rivals, which helps explain why supermarket profit margins are notoriously low.
Lower inflation should be beneficial to Tesco. However, with interest rates remaining elevated in the UK, this could persuade more people to switch to one of the low-cost supermarket options.
Tesco Dividend History
Tesco’s dividend payments were suspended in 2015 following an accounting scandal. However, payouts resumed in 2018 and, since then, the supermarket has maintained or increased its annual payout each year. The chart below highlights the Tesco dividend history between 2000 and 2024.
Tesco Share Price Forecast 2024
According to nine analysts who were recently asked for a Tesco stock forecast, seven gave the stock a ‘Buy’ rating, one gave it a ‘Hold’ and one rated it a ‘Sell’. Out of the analysts’ forecasts, the highest 12 month Tesco share price forecast was 425p, whilst the lowest was 270p. The average Tesco stock forecast provided was 376p.
How to Buy Tesco Shares
With an investing account from Admirals, you can buy shares in Tesco and many other FTSE 100 companies. Follow these steps on how to buy shares in Tesco to get started:
- Register for an Invest.MT5 account and log in to the Dashboard.
- Open the web trading platform.
- Search for Tesco stock and open a price chart.
- Enter the number of shares and click ‘Buy’ to send the order to the market.
Investing with Admirals
With an Invest.MT5 account from Admirals, you can buy shares in more than 4,500 companies around the world. Invest.MT5 account holders also have the ability to:
- Open an account with a low minimum deposit of just €1 with no account maintenance fees.
- Buy fractional shares in more than 700 of the world’s top companies.
- Access our wide range of educational materials, which include trading courses, live webinars, articles and regular market analysis.
On UK stocks such as Tesco, there is a commission of 0.1% on each transaction, with a minimum transaction fee of £1. Commissions can vary depending on the instrument, check out our Contract Specification page for more details.
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FAQ
Does Tesco pay dividends?
Yes, at the time of writing, Tesco shares pay dividends. However, it is important to remember that future dividends are never guaranteed.
When is Tesco dividend paid?
Tesco currently pays dividends twice a year; an interim dividend, which is paid around November, and a final dividend, which is paid around June.
What is Tesco market share?
In the United Kingdom, Tesco has a market share of around 27%.
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