Is Tesco stock undervalued?
Tesco: An Undervalued Retail Giant With A 3% Yield.
The latest broker consensus forecasts put Tesco shares on 13 times current year earnings, with a dividend yield of 3.9%. Like all forecasts, this could change based on future developments. This level of yield is above the FTSE 100 average of 3.5%, so I can see some attraction here as an income investor.
The key factor behind the falling share price is the cost of living squeeze. Shoppers are dealing with high inflation – the UK's consumer price index rose 6.2% in the year to February, the fastest pace in 30 years. But wage growth is not keeping up.
The 13 analysts offering 12 month price targets for Tesco PLC have a median target of 315.00, with a high estimate of 350.00 and a low estimate of 245.00. The median estimate represents a 18.33% increase from the last price of 266.20.
Tesco has received a consensus rating of Buy.
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Dividend Summary.
| Year | Amount | Change |
|---|---|---|
| 2019 | 9.15p | 58.6% |
| 2020 | 9.15p | 0% |
| 2021 | 10.9p | 19.1% |
| 2022 | Sign Up Required | |
WHAT HAPPENS IF I LEAVE TESCO? If you leave Tesco you may continue to use the Tesco Global Share Account for a period of up to two years from your leaving date (or, if later, up to 60 days after you have acquired shares from a Tesco PLC share plan release) before you must close your account and transfer your shares.
If you sell any of your Tesco shares you may become liable to capital gains tax.
| Last trade price | Day high | Last closing price |
|---|---|---|
| 268.90 | 271.80 | 270.70 |
Tesco share price recovers from February dip
That 28% drop came after shareholders approved the sale of Tesco's Malaysia and Thailand business for around £7.6bn, with £5bn of the proceeds being paid out to investors via a special dividend, while the rest went into Tesco's employee pension fund.
How often do Tesco pay dividends?
When does Tesco pay dividends? Tesco pays a dividend 2 times a year. Payment months are June, November. The dividend calendar shows you for more than 1,000 dividend stocks in which month which company distributes its dividends.
- Description : Annual Dividend - June, 2022.
- Div for Period. (pence per share): 7.70.
- Ex Dividend : 19/05/22.
- Record date : 20/05/22.
- Payment date : 24/06/22.
- Create or log in to your IG share dealing account.
- Search for 'Tesco' in your open investments.
- Select the position and click 'sell' in the deal ticket.
- Enter the number of shares you want to sell.
- Confirm the sale to close your investment position.
In April this year, Tesco then committed to buyback a total of £750m worth of shares by April 2023, meaning its will have bought back a cumulative £1.05bn worth of shares throughout the programme.
The 13 analysts offering 12-month price forecasts for Rolls-Royce Holdings PLC have a median target of 3.38, with a high estimate of 4.00 and a low estimate of 2.18. The median estimate represents a +213.38% increase from the last price of 1.08.
The latest earnings forecasts for Barclays suggest that return on equity — a key measure of profitability — will improve over the next couple of years. This is expected to translate into earnings growth of 7% in 2023 and 5% in 2024. Barclays' dividend is forecast to rise by more than 10% in each of these years.
Income opportunities
A business like Tesco tends to be highly cash generative. The Tesco dividend grew 19% last year and currently the shares offer a yield of 3.9%.
On an adjusted basis, stripping out exceptional charges such as restructuring and litigation costs, Tesco's profits more than tripled year on year from £636m to £2.03bn.
- Create or log in to your IG share dealing account.
- Search for 'Tesco' in your open investments.
- Select the position and click 'sell' in the deal ticket.
- Enter the number of shares you want to sell.
- Confirm the sale to close your investment position.
