Tesco
Website:
Tesco
Index:
FTSE 100
EPIC: TSCO
Supersector:
Retail
Sector:
Food and Drug Retailers
Subsector:
Food Retailers and Wholesalers
Market Cap:
£29.53B
Payout Frequency: Semi-Annual
Tesco Dividend Analysis and Summary
Headline Dividend Details
- Final dividend: 9.7p per share (subject to AGM approval)
- Interim dividend: 4.8p per share (paid Nov 2025)
- Full-year dividend: 14.5p, up 5.8% year-on-year (FY24/25: 13.7p)
- Ex-dividend date: 14/05/2026 (derived from record date)
- Record date: 15/05/2026
- Payment date: 26/06/2026
- Dividend policy: Progressive, targeting c.50% payout of adjusted EPS
- Implied payout ratio FY25/26: ~50% (14.5p DPS vs 29.0p adjusted EPS)
- DRIP available; election deadline: 05/06/2026
Coverage and Cash Flow Support
- Earnings cover: ~2.0x (29.0p adjusted EPS / 14.5p DPS)
- Free cash flow (FCF): £1,957m (+11.8% YoY)
- FCF dividend cover: ~2.1x (£1,957m FCF vs £937m dividends paid)
- Balance sheet: Net debt/EBITDA 2.1x (within “solid IG” framework of ~2.8–2.3x); liquidity £2.9bn plus undrawn £2.5bn RCF
- Capital returns: £1.45bn buyback completed in FY25/26; new £750m buyback to be completed by April 2027
- Guidance support: FY26/27 FCF guidance £1.5–2.0bn; adjusted operating profit guidance £3.0–3.3bn
Dividend Sustainability and Growth Outlook
- The 5.8% DPS increase is well-aligned with +6.0% adjusted EPS growth and the stated ~50% payout policy, indicating disciplined, earnings-linked progression.
- Strong cash generation (FCF ~£2.0bn) covers both dividends and a substantial buyback, while net leverage remains conservative at 2.1x.
- Operational efficiency (Save to Invest c.£535m in FY25/26, with a further £500m targeted in FY26/27) and ongoing market share gains underpin cash flows and dividend capacity.
- Capex stepping to ~£1.6bn is manageable within FCF guidance; buybacks should continue to support per-share metrics and dividend affordability.
Structural or Strategic Factors Affecting Future Dividends
- Capital allocation reaffirmed: Progressive dividend (~50% payout) plus return of surplus cash via buybacks; no change to dividend policy signalled.
- Share buybacks: Additional £750m to April 2027 enhances EPS and supports DPS growth runway.
- Segment presentation change: Booker reported as a separate operating segment; no direct impact on dividend policy.
- Banking disposal (completed FY24/25): Proceeds returned to shareholders; minimal ongoing separation costs remain but not material to dividend capacity.
- Investment program: Higher capex (automation, distribution centres, technology) aimed at productivity and growth, supporting medium-term cash generation.
Risks and Flags to Dividend Stability
- Macro/consumer risk: Management highlights uncertainty from the Middle East conflict and potential UK household pressure; FY26/27 profit guidance widened.
- Competitive and regulatory headwinds: Elevated competition (notably in CE/Slovakia) and higher UK costs (e.g., EPR levy, NI) could pressure margins if not offset by savings.
- Financing costs: Adjusted net finance costs expected to normalise higher (vs FY25/26 benefit from banking disposal proceeds), a modest drag on FCF.
- Leases and net debt: Lease interest rising; net debt up YoY (though leverage still prudent).
Read more
Tesco Annual Dividend Yield - 3.08%
Dividends Used in Calculation:
| Ex-Dividend Date |
Payment Date |
Type |
Amount |
Currency |
| 15/05/2025 |
27/06/2025 |
Final |
9.45p |
GBX |
| 09/10/2025 |
21/11/2025 |
Interim |
4.80p |
GBX |
Total (Annual Dividends Per Share):
14.25p
Dividend Yield =
Annual Dividends Per Share (14.25p)
÷ Share Price (462.8p)
= 3.08%
Tesco Dividend History
| Ex Dividend Date |
Payment Date |
Type |
Amount |
Currency |
| 14/05/2026 |
26/06/2026 |
Final |
9.7000p |
GBX |
| 09/10/2025 |
21/11/2025 |
Interim |
4.80p |
GBX |
| 15/05/2025 |
27/06/2025 |
Final |
9.45p |
GBX |
| 10/10/2024 |
22/11/2024 |
Interim |
4.25p |
GBX |
| 16/05/2024 |
28/06/2024 |
Final |
8.25p |
GBX |
| 12/10/2023 |
24/11/2023 |
Interim |
3.85p |
GBX |
| 11/05/2023 |
23/06/2023 |
Final |
7.05p |
GBX |
| 13/10/2022 |
25/11/2022 |
Interim |
3.85p |
GBX |
| 19/05/2022 |
24/06/2022 |
Final |
7.70p |
GBX |
| 14/10/2021 |
26/11/2021 |
Interim |
3.20p |
GBX |
| 20/05/2021 |
02/07/2021 |
Final |
5.95p |
GBX |
| 15/02/2021 |
26/02/2021 |
Special |
50.93p |
GBX |
| 15/10/2020 |
27/11/2020 |
Interim |
3.20p |
GBX |
| 21/05/2020 |
03/07/2020 |
Final |
6.50p |
GBX |
| 10/10/2019 |
22/11/2019 |
Interim |
2.65p |
GBX |
| 16/05/2019 |
21/06/2019 |
Final |
4.10p |
GBX |
| 11/10/2018 |
23/11/2018 |
Interim |
1.67p |
GBX |
| 17/05/2018 |
22/06/2018 |
Final |
2.00p |
GBX |
| 12/10/2017 |
24/11/2017 |
Interim |
1.00p |
GBX |
| 30/10/2014 |
19/12/2014 |
Interim |
1.16p |
GBX |
| 30/04/2014 |
04/07/2014 |
Final |
10.13p |
GBX |
| 09/10/2013 |
20/12/2013 |
Interim |
4.63p |
GBX |
| 24/04/2013 |
05/07/2013 |
Final |
10.13p |
GBX |
| 10/10/2012 |
21/12/2012 |
Interim |
4.63p |
GBX |
| 25/04/2012 |
06/07/2012 |
Final |
10.13p |
GBX |
| 12/10/2011 |
23/12/2011 |
Interim |
4.63p |
GBX |
| 27/04/2011 |
08/07/2011 |
Final |
10.09p |
GBX |
| 13/10/2010 |
24/12/2010 |
Interim |
4.37p |
GBX |
| 28/04/2010 |
09/07/2010 |
Final |
9.16p |
GBX |
| 14/10/2009 |
24/12/2009 |
Interim |
3.89p |
GBX |
| 29/04/2009 |
10/07/2009 |
Final |
8.39p |
GBX |
| 08/10/2008 |
19/12/2008 |
Interim |
3.57p |
GBX |
| 23/04/2008 |
04/07/2008 |
Final |
7.70p |
GBX |
| 10/10/2007 |
21/12/2007 |
Interim |
3.20p |
GBX |
| 25/04/2007 |
06/07/2007 |
Final |
6.83p |
GBX |
| Year |
Interim |
Final |
Special |
Currency |
Total |
Change |
| 2024 |
4.250 |
8.250 |
|
GBX |
12.500 |
14.670 |
| 2023 |
3.850 |
7.050 |
|
GBX |
10.900 |
-5.620 |
| 2022 |
3.850 |
7.700 |
|
GBX |
11.550 |
-80.770 |
| 2021 |
3.200 |
5.950 |
50.930 |
GBX |
60.080 |
519.380 |
| 2020 |
3.200 |
6.500 |
|
GBX |
9.700 |
43.700 |
| 2019 |
2.650 |
4.100 |
|
GBX |
6.750 |
83.920 |
| 2018 |
1.670 |
2.000 |
|
GBX |
3.670 |
267.000 |
| 2017 |
1.000 |
|
|
GBX |
1.000 |
-91.140 |
| 2014 |
1.160 |
10.130 |
|
GBX |
11.290 |
-23.500 |
| 2013 |
4.630 |
10.130 |
|
GBX |
14.760 |
0.000 |
| 2012 |
4.630 |
10.130 |
|
GBX |
14.760 |
0.270 |
| 2011 |
4.630 |
10.090 |
|
GBX |
14.720 |
8.790 |
| 2010 |
4.370 |
9.160 |
|
GBX |
13.530 |
10.170 |
| 2009 |
3.890 |
8.390 |
|
GBX |
12.280 |
8.960 |
| 2008 |
3.570 |
7.700 |
|
GBX |
11.270 |
12.360 |
| 2007 |
3.200 |
6.830 |
|
GBX |
10.030 |
|
Tesco Dividend Calculator
Tesco Dividend Growth
| Dividend Growth (1Y) |
5.84%
|
| Dividend CAGR (5Y) |
-24.96%
|
| Years of Growth |
2
|
| Payout Ratio |
52.43%
|
| Buyback Yield |
4.51%
|
| Shareholder Yield |
7.64%
|
| P/E Ratio (TTM) | 17.08 |
|---|
| Forward P/E | 15.02 |
|---|
| P/FCF | 11.46 |
|---|
| Earnings Yield | 6.09% |
|---|
| FCF Yield | 8.73% |
|---|
| ROE | 15.46% |
|---|
| ROCE | 12.3% |
|---|
| Profit Margin | 2.42% |
|---|
| Operating Margin | 4.2% |
|---|
| Gross Margin | 7.63% |
|---|