Tesco Dividend

[onthemove]

"Dividend:
Reflecting the strength of our performance last year and given our robust liquidity and balance sheet, we propose to pay a final dividend of 6.50 pence per ordinary share. This takes the total dividend for the year to 9.15 pence per ordinary share, up 58.6% year-on-year, including the payment of an interim dividend of 2.65 pence per ordinary share in November 2019. This represents a full-year dividend pay-out ratio of 50% on a 53 week basis.
We expect to maintain a full-year dividend pay-out ratio of 50% going forward and from 2020/21 our interim dividend will be set at 35% of the prior year full-year dividend.
The proposed final dividend was approved by the Board of Directors on 7 April 2020 and is subject to the approval of shareholders at this year's Annual General Meeting. The final dividend will be paid on 3 July 2020 to shareholders who are on the register of members at close of business on 22 May 2020 (the Record Date). Shareholders may elect to reinvest their dividend in the Dividend Reinvestment Plan (DRIP). " https://www.londonstockexchange.com/exc ... 95925.html

I might have missed something though, the BBC report..

https://www.bbc.co.uk/news/business-52211912

"Tesco also intends to pay a dividend on the current financial year, though at a lower level."

Unless they're talking about the "interim dividend will be set at 35% of the prior year full-year dividend".

[tjh290633]

Also in https://www.investegate.co.uk/tesco-plc ... 02021841J/

On 9 March 2020, the Group announced the proposed sale of Tesco Thailand and Tesco Malaysia to a combination of CP Group entities for net cash proceeds of $10.3 billion (equivalent to £8.0 billion) before tax and other transaction costs. The transaction is subject to shareholder and customary regulatory approvals and is expected to complete during the second half of calendar year 2020. Following completion of the disposal, the Board intends to return c.£5.0 billion to shareholders via a special dividend with associated share consolidation, and reduce indebtedness through a £2.5 billion pension contribution that is expected to significantly reduce the prospect of having to make further pension deficit contributions in the future.

TJH

[onthemove]

Apologies and crikey!

I didn't look far enough down the list of posts before posting and have just spotted IDPickering had already posted the update earlier today.

I'm not used to seeing so many threads being active in one day on this board!

[idpickering]

Apologies and crikey!

I didn't look far enough down the list of posts before posting and have just spotted IDPickering had already posted the update earlier today.

I'm not used to seeing so many threads being active in one day on this board!

And I’m knackered starting them! No seriously, I think we all need to be on our toes in this current market, and remain informed. If I help others in being so, that’s great. I don’t hold Tesco, but having lost two of my prospective dividends today, AV. and SMDS, I don’t mind saying I’m a bit jealous of Tesco holders right now.

Ian.

[Alaric]

I don’t mind saying I’m a bit jealous of Tesco holders right now.

The supermarket groups will presumably have coined it over the last couple of months both with increased turnover and the ability to drop loss leading promotions. Tesco were also making noises about increased operating costs going forward.

Political interference as with Banks and Insurers remains possible.

[idpickering]

I don’t mind saying I’m a bit jealous of Tesco holders right now.

The supermarket groups will presumably have coined it over the last couple of months both with increased turnover and the ability to drop loss leading promotions. Tesco were also making noises about increased operating costs going forward.

Political interference as with Banks and Insurers remains possible.

Thanks for that Alaric. I don’t hold any retail shares, and despite my tongue in cheek comment above, have no intention of buying any.

Ian.

[mike]

Political interference as with Banks and Insurers remains possible.

Yes, especially as HMG is giving rates relief to all retail, not just to small shops. We may get a "no rates relief if you pay a dividend" advice from HMG along the lines of the German "advice" to TUI mentioned recently hereabouts regarding a loan.

[Wizard]

Political interference as with Banks and Insurers remains possible.

Yes, especially as HMG is giving rates relief to all retail, not just to small shops. We may get a "no rates relief if you pay a dividend" advice from HMG along the lines of the German "advice" to TUI mentioned recently hereabouts regarding a loan.

Not an unreasonable response and I suspect Joe Public would agree. Otherwise it does look rather like a direct transfer from tax payers to Tesco shareholders. But of course that could be extended to ' no furlough payments for staff' if dividends paid.

[scrumpyjack]

Tesco do say that the rates relief is less than all the additional costs they are incurring to maximise food supplies etc.
Have hired vast additional numbers of staff
Are putting 2.5 billion into the pension fund.
The dividend is still substantially lower than it was 10 years ago.
Lots of other positive actions set out in their statement

[dealtn]

The supermarket groups will presumably have coined it over the last couple of months both with increased turnover and the ability to drop loss leading promotions.

Lazy "presumption" I'm afraid.

https://www.londonstockexchange.com/exc ... 95925.html

and

https://www.londonstockexchange.com/exc ... 95926.html

Plenty to read in there about the impact, good and bad, on their business, rather than make guesses or assumptions.

[Arborbridge]

Apologies and crikey!

I didn't look far enough down the list of posts before posting and have just spotted IDPickering had already posted the update earlier today.

I'm not used to seeing so many threads being active in one day on this board!

And I’m knackered starting them! No seriously, I think we all need to be on our toes in this current market, and remain informed. If I help others in being so, that’s great. I don’t hold Tesco, but having lost two of my prospective dividends today, AV. and SMDS, I don’t mind saying I’m a bit jealous of Tesco holders right now.

Ian.

Swings and boundarouts Ian. Tesco holders have been lampooned for holding on patiently since when - about 2012? I'm glad if Tesco pay me a few shekels, a bright spot in all the cancellations and moral blackmail going on. Good for Tesco the board for putting up a good fight.

[Arborbridge]

Political interference as with Banks and Insurers remains possible.

Yes, especially as HMG is giving rates relief to all retail, not just to small shops. We may get a "no rates relief if you pay a dividend" advice from HMG along the lines of the German "advice" to TUI mentioned recently hereabouts regarding a loan.

Not an unreasonable response and I suspect Joe Public would agree. Otherwise it does look rather like a direct transfer from tax payers to Tesco shareholders. But of course that could be extended to ' no furlough payments for staff' if dividends paid.

And who, exactly, is going to furlough pensioners who far from being economically non-active, spend their money supporting businesses? We have to live too and each of us needs to carry on as best as possible without this sort of intersectional dog eats dog atmosphere. Live and let live, surely should be the motto of the day - aren't we all in it together?

I've not made any extra demands on the state since I retired yet millions are now having dosh thrown at them. I repeat, I think this is good and necessary, but there are consequences on pensioners who are often lower earners and by characterising us as all rich and greedy shareholders the Joe Public you mention, while enjoying his helping hand, is be disingenuous.
I can do my bit by not wanting state help, but only if the state realises that I should be allowed my dividends when the companies are prudently able to pay them.



Arb.

[Wizard]

Yes, especially as HMG is giving rates relief to all retail, not just to small shops. We may get a "no rates relief if you pay a dividend" advice from HMG along the lines of the German "advice" to TUI mentioned recently hereabouts regarding a loan.

Not an unreasonable response and I suspect Joe Public would agree. Otherwise it does look rather like a direct transfer from tax payers to Tesco shareholders. But of course that could be extended to ' no furlough payments for staff' if dividends paid.

And who, exactly, is going to furlough pensioners who far from being economically non-active, spend their money supporting businesses? We have to live too and each of us needs to carry on as best as possible without this sort of intersectional dog eats dog atmosphere. Live and let live, surely should be the motto of the day - aren't we all in it together?

I've not made any extra demands on the state since I retired yet millions are now having dosh thrown at them. I repeat, I think this is good and necessary, but there are consequences on pensioners who are often lower earners and by characterising us as all rich and greedy shareholders the Joe Public you mention, while enjoying his helping hand, is be disingenuous.
I can do my bit by not wanting state help, but only if the state realises that I should be allowed my dividends when the companies are prudently able to pay them.



Arb.

But that is the point, would the companies be able to prudently pay them without the support they are receiving from the taxpayer?

[Bouleversee]

I agree, Arb. At least 33 of my dividends are so far being cancelled or deferred and only 2 or 3 so far have said they intend to pay, and even that is not certain, so that is well over 50% of my total income disappeared. I can understand why some companies cannot pay, though I should have thought a reduced amount would be affordable in many cases, but I see no reason why those companies who have strong balance sheets and have calculated they can afford to pay should be demonised for doing so. I really don't see why shareholders should carry the whole can, losing entire income in many cases as well as suffering large capital losses. Those who are already going through their life savings paying care home fees will rapidly find their life savings down to almost nothing if all their dividends are cancelled and even if we are not yet in that position, we still have commitments. Oh for a final salary scheme! Not much encouragement for the next generations to save and invest.

Back to Tesco, there is no need for Ian P. to envy shareholders. The s.p. is down 4.94% on the day as of a few minutes ago, and the holding in an ISA, bought some years ago, is down 42.54%. I tried to read those linked statements dealtn provided but there is too much to read in too small print and I really don't know how to interpret them. I have another small holding in certificated form which I have held for even longer and am wondering whether to put them in an ISA or hang on in the hope of a recovery and then sell. I note that if the special dividend is paid it will be accompanied by a share consolidation, though I cannot remember the tax implications of this or get my fogged brain round how much that would benefit holders. Do any Fools have any views on Tesco's future prospects. I should imagine that once the lockdown is over and some recent customers have returned to Lidl and Aldi and people start running down their hoards of loo paper etc., sales will return to normal but have Tesco made sufficient changes to improve their performance in the long term? Has anyone worked out what the special dividend is likely to be if it goes ahead?

In answer to Wizard's question, IIRC that Tesco's linked statement said they had incurred extra expenses in recruiting extra staff etc. which would offset the tax saving.

[Wizard]

I agree, Arb. At least 33 of my dividends are so far being cancelled or deferred and only 2 or 3 so far have said they intend to pay, and even that is not certain, so that is well over 50% of my total income disappeared. I can understand why some companies cannot pay, though I should have thought a reduced amount would be affordable in many cases, but I see no reason why those companies who have strong balance sheets and have calculated they can afford to pay should be demonised for doing so. I really don't see why shareholders should carry the whole can, losing entire income in many cases as well as suffering large capital losses. Those who are already going through their life savings paying care home fees will rapidly find their life savings down to almost nothing if all their dividends are cancelled and even if we are not yet in that position, we still have commitments. Oh for a final salary scheme! Not much encouragement for the next generations to save and invest.

My bold.

I completely agree.

Back to Tesco, there is no need for Ian P. to envy shareholders. The s.p. is down 4.94% on the day as of a few minutes ago, and the holding in an ISA, bought some years ago, is down 42.54%. I tried to read those linked statements dealtn provided but there is too much to read in too small print and I really don't know how to interpret them. I have another small holding in certificated form which I have held for even longer and am wondering whether to put them in an ISA or hang on in the hope of a recovery and then sell. I note that if the special dividend is paid it will be accompanied by a share consolidation, though I cannot remember the tax implications of this or get my fogged brain round how much that would benefit holders. Do any Fools have any views on Tesco's future prospects. I should imagine that once the lockdown is over and some recent customers have returned to Lidl and Aldi and people start running down their hoards of loo paper etc., sales will return to normal but have Tesco made sufficient changes to improve their performance in the long term? Has anyone worked out what the special dividend is likely to be if it goes ahead?

In answer to Wizard's question, IIRC that Tesco's linked statement said they had incurred extra expenses in recruiting extra staff etc. which would offset the tax saving.

My bold.

You seem to be reinforcing my point, not sure if that was intended. As you say, without the support of the tax payer through the business rates holiday the business would have had greater costs to absorb, so may have been less well able to pay a dividend.

[Arborbridge]

I can do my bit by not wanting state help, but only if the state realises that I should be allowed my dividends when the companies are prudently able to pay them.
Arb.

But that is the point, would the companies be able to prudently pay them without the support they are receiving from the taxpayer?

Yes, of course, many of them would indeed (the banks?).
Some find their market has evaporated, so fair enough, they should cancel.
There are others in which a sort of frenzy of prudence is infecting board rooms, and in that instance it is more borderline. However, in those cases it would be helpful if instead of just cancelling a dividend, it was postponed subject to clarity emerging during in the next period.

And has been widely pointed out, the HMG on behalf of the tax payer is acting in self-interest. Companies would otherwise lay off staff and the cost to the tax payer of people laid off for months or years on universal credit could be almost as bad. The taxpayer isn't doing firms a favour, so much as doing themselves a favour.
If suspending business rates, for example, means companies are over a barrel as regards their business and commercial behaviour, then I'd say stuff that! This isn't "help" but being forced to supp with the devil.

Arb.

[dealtn]

I tried to read those linked statements dealtn provided but there is too much to read in too small print and I really don't know how to interpret them.

What would you like help on?

[Arborbridge]

In answer to Wizard's question, IIRC that Tesco's linked statement said they had incurred extra expenses in recruiting extra staff etc. which would offset the tax saving.

My bold.

You seem to be reinforcing my point, not sure if that was intended. As you say, without the support of the tax payer through the business rates holiday the business would have had greater costs to absorb, so may have been less well able to pay a dividend.[/quote]

I think you are looking through the wrong end of the telescope. Tesco has made extra efforts to help the community, which they may not normally have done. They have taken the business rate holiday and in effect donated it and some, to helping others.

Rather than feel obliged to the government, it would have beeb better to tell them not to interfer - and I suspect the effect on society would be worse. Though I doubt Tesco were given a choice.

The whole of our society is based on capitalism. Shareholders are part of the stakeholder system and they must be paid and indeed they arrange their lives around that status quo: to renage on that smacks of a socialist state. If you want something different, that's a different matter. In fact I rather wonder if your views would be radically different if you were retired and living on your investments. You would be employing quite different arguments then! As a high yield investor yourself (I'm beginning to wonder if you are) your attitude is rather surprising.

Arb.

[Bouleversee]

I tried to read those linked statements dealtn provided but there is too much to read in too small print and I really don't know how to interpret them.

What would you like help on?

Just what I said in my second para.

[idpickering]

Back to Tesco, there is no need for Ian P. to envy shareholders. The s.p. is down 4.94% on the day as of a few minutes ago, and the holding in an ISA, bought some years ago, is down 42.54%.

I get where you're coming from Lorna, and I'm sorry if my remark caused offence. I meant no disrespect in my comment, nor was I trying to be smart.

All the best,

Ian.