Sainsbury J

Website: Sainsbury J
Index: FTSE 100
EPIC: SBRY
Supersector: Retail
Sector: Food and Drug Retailers
Subsector: Food Retailers and Wholesalers
Market Cap: £7.33B
Payout Frequency: Semi-Annual

Sainsbury J Dividend Analysis and Summary

Declared dividends and key dates

Interim ordinary dividend: 4.1p per share (up ~5% vs 3.9p). Policy unchanged: the interim equals c.30% of the prior year’s full-year dividend.
Special dividend: 11.0p per share, funded from Sainsbury’s Bank disposal proceeds; the Board has confirmed no share consolidation alongside the special.
Payment date: 19/12/2025 (for both interim and special).
Record date: 14/11/2025 (for both).
Ex-dividend date: 13/11/2025 (derived as one business day before the 14 November record date).
Dividend Reinvestment Plan (DRIP) election deadline: 28/11/2025.
Last year’s total ordinary dividend: 13.6p (3.9p interim + 9.7p final).

Cash returns and capital allocation

Total cash returns in FY25/26 now expected to exceed £800m (ordinary and special dividends + buybacks).
Buybacks: core £200m in FY25/26 (c.£158m completed by 12 Sept 2025), plus an extra £50m in FY25/26 and £100m in FY26/27, funded by bank disposal proceeds.
Special dividend funded by >£400m net proceeds from Financial Services disposals; £250m returned via the 11.0p special dividend.

Support from financial performance

H1 Retail underlying operating profit: £504m (flat YoY); underlying PBT up 10% to £340m; underlying EPS up 12% to 10.3p.
H1 Retail free cash flow (FCF): £310m; full-year Retail FCF guidance: >£500m.
Ordinary dividends paid in the period (£223m, the 9.7p final) were covered 1.4x by H1 Retail FCF. Using last year’s ordinary cash cost (£308m), guidance implies ordinary dividend cover of roughly ~1.6x+ for FY25/26 if FCF >£500m.
Balance sheet: non-lease net debt only £81m; net debt/EBITDA 2.5x (within target range); investment grade profile maintained.
Capex: £800–£850m expected in FY25/26, focused on high-return projects (store space reallocations, automation, technology).

Analysis: Sustainability and growth outlook

Ordinary dividend sustainability: Solid H1 cash generation, FY FCF >£500m guidance, improved EPS, and stable leverage all support a well-covered ordinary dividend. Policy remains disciplined (interim = 30% of prior year total), indicating a cautious, sustainable approach.
Growth trajectory: Interim up ~5% aligns with modest, steady growth. With underlying EPS up 12% and cost savings ongoing (£1bn target to FY26/27), capacity to continue low-to-mid single digit ordinary DPS growth looks reasonable if trading and FCF hold.
Special dividend: Clearly one-off and ring-fenced from disposal proceeds; no structural increase to ongoing payout obligations. No share consolidation means a straightforward 11.0p cash return, with buybacks further enhancing per-share metrics over time.

Structural changes and policy implications

Financial Services exit: Phased withdrawal progressing; proceeds exceeding prior expectations (>£400m). Near-term FS underlying contribution guided to ~breakeven for FY25/26; new partnered income streams expected to build to at least £40m profit by FY28. This simplifies the group and helps fund near-term returns without compromising ordinary dividend policy.
No share consolidation with the special dividend (previously contemplated), reducing complexity for income investors.
Ongoing estate optimisation and Argos transformation expected to improve efficiency and returns; not adverse to dividend policy.

Risks and flags relevant to dividend stability

Operating cost pressure: Higher employment costs and the new EPR levy compressed margin slightly (retail underlying operating margin down 7 bps). Sustained inflationary/regulatory costs could temper future dividend growth if not offset by savings.
Competitive grocery market: Continued price investment required to defend share could weigh on margins if volumes soften.
Legal/contingent risks: Ongoing equal-pay litigation (no provision booked); adverse outcomes could be material over time.
Lease-heavy model: Significant lease liabilities and rising lease interest costs (FY25/26 underlying net finance cost guidance £300–£310m) add fixed-charge sensitivity.
Execution risk: Delivery of £1bn cost savings, space reallocation, and Argos transformation must stay on track to underpin cash flows.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
05/06/2025	11/07/2025	Final	9.70p	GBX
13/11/2025	19/12/2025	Interim	4.1000p	GBX
13/11/2025	19/12/2025	Special	11.0000p	GBX

Total (Annual Dividends Per Share): 24.80p

Dividend Yield = Annual Dividends Per Share (24.80p) ÷ Share Price (322.6p) = 7.69%

Ex Dividend Date	Payment Date	Type	Amount	Currency
13/11/2025	19/12/2025	Interim	4.1000p	GBX
13/11/2025	19/12/2025	Special	11.0000p	GBX
05/06/2025	11/07/2025	Final	9.70p	GBX
14/11/2024	20/12/2024	Interim	3.90p	GBX
06/06/2024	12/07/2024	Final	9.20p	GBX
09/11/2023	15/12/2023	Interim	3.90p	GBX
08/06/2023	14/07/2023	Final	9.20p	GBX
10/11/2022	16/12/2022	Interim	3.90p	GBX
09/06/2022	15/07/2022	Final	9.90p	GBX
11/11/2021	17/12/2021	Interim	3.20p	GBX
10/06/2021	16/07/2021	Final	7.40p	GBX
12/11/2020	18/12/2020	Interim	3.20p	GBX
12/11/2020	18/12/2020	Special	7.30p	GBX
14/11/2019	20/12/2019	Interim	3.30p	GBX
06/06/2019	12/07/2019	Final	7.90p	GBX
15/11/2018	21/12/2018	Interim	3.10p	GBX
07/06/2018	13/07/2018	Final	7.10p	GBX
16/11/2017	02/01/2018	Interim	3.10p	GBX
11/05/2017	07/07/2017	Final	6.60p	GBX
17/11/2016	04/01/2017	Interim	3.60p	GBX
12/05/2016	08/07/2016	Final	8.10p	GBX
19/11/2015	04/01/2016	Interim	4.00p	GBX
14/05/2015	10/07/2015	Final	8.20p	GBX
20/11/2014	02/01/2015	Interim	5.00p	GBX
14/05/2014	11/07/2014	Final	12.30p	GBX
20/11/2013	03/01/2014	Interim	5.00p	GBX
15/05/2013	12/07/2013	Final	11.90p	GBX
21/11/2012	04/01/2013	Interim	4.80p	GBX
18/05/2011	15/07/2011	Final	10.80p	GBX
17/11/2010	07/01/2011	Interim	4.30p	GBX
19/05/2010	16/07/2010	Final	10.20p	GBX
18/11/2009	08/01/2010	Interim	4.00p	GBX
20/05/2009	17/07/2009	Final	9.60p	GBX
19/11/2008	02/01/2009	Interim	3.60p	GBX
21/05/2008	18/07/2008	Final	9.00p	GBX
21/11/2007	04/01/2008	Interim	3.00p	GBX
23/05/2007	20/07/2007	Final	7.35p	GBX
22/11/2006	05/01/2007	Interim	2.40p	GBX

Year	Interim	Final	Special	Currency	Total	Change
2024	3.900	9.200		GBX	13.100	0.000
2023	3.900	9.200		GBX	13.100	-5.070
2022	3.900	9.900		GBX	13.800	30.180
2021	3.200	7.400		GBX	10.600	0.950
2020	3.200		7.300	GBX	10.500	-6.250
2019	3.300	7.900		GBX	11.200	9.800
2018	3.100	7.100		GBX	10.200	5.150
2017	3.100	6.600		GBX	9.700	-17.090
2016	3.600	8.100		GBX	11.700	-4.090
2015	4.000	8.200		GBX	12.200	-29.470
2014	5.000	12.300		GBX	17.300	2.360
2013	5.000	11.900		GBX	16.900	252.080
2012	4.800			GBX	4.800	-55.550
2011		10.800		GBX	10.800	-25.510
2010	4.300	10.200		GBX	14.500	6.610
2009	4.000	9.600		GBX	13.600	7.930
2008	3.600	9.000		GBX	12.600	21.730
2007	3.000	7.350		GBX	10.350	331.250
2006	2.400			GBX	2.400

Number of Shares:

Payment	Paid	Amount
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