While Tesco benefited from its essential status throughout the coronavirus pandemic, including a record breaking festive period, the supermarket’s associated costs are expected to spiral to £810m.
Importantly, Tesco has invested heavily in its delivery capabilities, as UK grocery shoppers are increasingly moving online.
In addition to broad economic concerns, Tesco is coming under pressure from shareholders to act in a socially responsible way.
A resolution put forward by more than 100 Tesco shareholders, proposing the supermarket does more to combat obesity, will be voted on at Tesco’s AGM later this year.
Tesco share price
Over the last 12 months, Tesco’s share price has dropped by over 6%. However, since the turn of the year, the supermarket’s share price is up from 237p to 240.7p.
While this doesn’t appear to be overly impressive, compared to the FTSE 100 index, Tesco shares have performed well. Over the past three months, Tesco shares have outperformed the FTSE 100 by 7%.
Out of 18 analysts covering Tesco, 13 gave ‘buy’ or ‘outperform’ recommendations, three said ‘hold’, and only two gave ‘underperform’ recommendations, as of 14 February 2021.
Tesco dividend
On Thursday Tesco shareholders approved a £5bn special dividend. The dividend is a 50.93p per share payment which amounted to over 21% of the company’s market capitalisation.
The funds came from December’s sale of its Thai and Malaysian operations. Tesco will also use some of the proceeds to make a £2.5 billion contribution to its pension fund.
Prior to the 2021 special dividend, Tesco’s dividend yields have increased year-on-year at 1.5%, 2.6% and 4% in 2018, 2019 and 2020 respectively.