In the week when Sainsbury’s shareholders received news of a major windfall, research by The Grocer confirms that the retailer pays the best dividend of any of the top UK multiples.
Two years ago we bought £100 worth of Sainsbury shares as part of a portfolio covering five food retailers and five suppliers. We have received a payout of £8.55 from investment
in Sainsbury, compared with the £6.38 we earnt in dividends from market leader Tesco.
Our shares in Sainsbury are today worth just £84.30, which means we have made a £7.15 loss on our investment. Tesco, on the other hand, yielded an overall £13.71 profit.
But our best investment overall was in Somerfield, which gave us a profit of more than £88 thanks mainly to an 85% jump in its share price in the past two years.
Last week’s profit warning by Sainsbury - and the news that its like-for-like sales fell by 0.2% in the past year - resulted in the troubled retailer’s share price tumbling from 280p to 265p. This confirmed its status as having the worst performing shares of all the chains in our portfolio.
The latest Sainsbury windfall will come from the sale of its US subsidiary Shaw’s to Albertson’s for £1.37bn. From the proceeds of that deal, some £680m will be returned to its shareholders.
But analysts have cast doubt over whether Sainsbury can maintain its dividend record following the profit warning.
Merrill Lynch said: “Should further cuts to forecasts be necessary, as we anticipate, then the dividend may yet have to be cut.” And analysts at JP Morgan warned the 2004/05 dividend could be halved.
Sean McAllister
Two years ago we bought £100 worth of Sainsbury shares as part of a portfolio covering five food retailers and five suppliers. We have received a payout of £8.55 from investment
in Sainsbury, compared with the £6.38 we earnt in dividends from market leader Tesco.
Our shares in Sainsbury are today worth just £84.30, which means we have made a £7.15 loss on our investment. Tesco, on the other hand, yielded an overall £13.71 profit.
But our best investment overall was in Somerfield, which gave us a profit of more than £88 thanks mainly to an 85% jump in its share price in the past two years.
Last week’s profit warning by Sainsbury - and the news that its like-for-like sales fell by 0.2% in the past year - resulted in the troubled retailer’s share price tumbling from 280p to 265p. This confirmed its status as having the worst performing shares of all the chains in our portfolio.
The latest Sainsbury windfall will come from the sale of its US subsidiary Shaw’s to Albertson’s for £1.37bn. From the proceeds of that deal, some £680m will be returned to its shareholders.
But analysts have cast doubt over whether Sainsbury can maintain its dividend record following the profit warning.
Merrill Lynch said: “Should further cuts to forecasts be necessary, as we anticipate, then the dividend may yet have to be cut.” And analysts at JP Morgan warned the 2004/05 dividend could be halved.
Sean McAllister
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