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and of course plugging the pension gap
profitability
this is equivalent to about 188p with the dividend taken off.
I think this is a reasonable purchase level considering that profitable for Tesco is such that it is likely to be as high as when it had the sold assets. Also made a loss making Polish asset sale.
Today 12 Feb : Last chance saloon
Concise summary - If you dont sell today and the SP remains approx the same next week, ypu will have "gained" via no drop in the SP. If the consolidation on Monday results in a subsequent rise in SP you will have gained. If the lead up to the May final divi qualification date shows a higher SP, as is likely, on the strength of final results, you will have gained (and also the choice of whether to sell out- ot not). If one or more of these do not occur, you are likely to be no worse off.
Three possible/likely short term gains. Thats good enough for me.
I remember National Grid having a consolidation a few years back, but it was incorporated into a final dividend and so did not have the double positive effect that the separate Tesco
special divi, separate Tesco consolidation and separate final divi has. That holding never wenr into positive territory afterwards, though the divis kept coming at nearly 5%. But then NG is a utility - enough said.
at about 239p
I got a letter from HSBC saying that they were suspending trading on Tesco at 16.00 YESTERDAY.
Obviously had the wrong date on letter.
Share price Monday on the open will be what ever price it finishes at give or take a penny or two!
Have bottled it ,sold out ,sacrificed the divi and took the profit.This is good news for people who are taking the divi as I'm sure now I've sold the shares will rise sharply monday.If by any chance they drop next week I'll re invest.
It's getting tantalisingly close to what my buy target but I'm wary of it falling further come monday . there are a few buying in today .. think it's a bit of a lottery ..
Silver Baron
You have already discounted Special Dividend in your example below. Financial result will be publish on 14 Apr 21, and I presume, final div will be declared at that time. Perhaps shareholders may be rewarded with higher div at that time.
Summarising - The first to look for is whether the consolidation will work out as planned - Will the SP drop, as is usual, with post divi SPs? The second is will the SP rise towards May final divi qualification date due to the "strengthened" Tesco? If you believe "Yes" to both then you should be holding or buying (especially at todays 2.40 SP). If you are happy with a large holding showing a good profit at todays pre consolidation SP then sell today.
Bear in mind there are still many FT100/250 companies still paying NO divis at the moment, and with no hints that they will in the near future. And those companies do not show the same optimism that Tesco does with its likely final year results due at end of February with almost certainly good profits from hugely increased online sales.
Its a comparative exercise, and Tesco is one of the markedly better bets at the moment in the middle of the Covid crisis.
Mags, I am starting to think that the share consolidation should have been step 1, and that the bod should have saved the SD for later. If investors don't see a clear benefit from the SD and they even make a loss, our bod will have failed because they could have made good use of £5bn in other ways. Provided we don't see a stock market crash today then I remain hopeful that the two actions will at least produce a real gain for investors. JJ
Jimjam.
yes, this is coinciding with a dip in the markets, Dow maybe on the way down slightly and bad news regarding the economy might see Tesc slip lower .. interesting week coming up ...
Happy enough for this to drop more on Monday means if you have reinvested the sd you wil get more shares.
I would have expected the SP to hold. For some PIs the resolutions might be a lot of info to take in. They are for me. To clarify on Monday it is the consolidated shares being admitted to the markets, not a rather large fund raising opportunity.
Monday, it will become clear and so I'm happy to wait to see whether my recent buy has worked out to my benefit. In hindsight it may prove that I should have bought in March '21. Good luck to all holders. JJ
Replying to one's own post smakc's of Billy-No-Mates, but continuing this thread. Mostly BLUE buys showing today at 2.40-2.41 levels with some Sells at same, however again price is dropping away from its 247-249p highs earlier this week. Again, with a 51p SD on offer people should be piling in, but the Consol is now out of the bag in terms of nulifying the full SD gain. No one can accurately say if the SP will deliver a win or loss. There have been forecasts between 313p and 190p so take your pick. I think that this will take a few days to shake out and I dont expect a difinitive position on Monday. I have a concern that the consol impact on the SD "reward to shareholders" may leave a bitter taste in many mouths, it is hugely clear that TSCO have given with one hand and mostly taken away with the other, but hoping that the SP doesnt drop afrer SD ExD and this may become the "bonus" in reality. If the 245p SP was maintained, then only holding I would have enjoyed £1300 SD, but this would have been reduced to £650 actual gain after consol, (reduced shares at 245p plus 1300 minus my original investment - see below if interested ). The other issue unsanswered is will TSCO pay an increased dividend in July based on fewer shares in circulation vs the capitalisation/profit of TESCO. Getting the same 7p after they have whipped off 25% of everyones holding and so resulting in lower divi cheque would further add bitter taste.
i looked at this and decided to not buy in as the consolidation made the usual SD benefit negligible.
Buy 190 shares now at £2.41 for £458. You will get dividend of £96.76. Consolidation will leave you with 150 shares with the same Book Cost of £458. So when in any profit you can sell so dividend a benefit especially buying today!
Spindler it does also depend on your average price. It is the traders that will be taking the risk. The investor buying last year when the sp was in the low 200s have the breathing space to make an informed decision next week. Buying in the last few weeks has always been a gamble.
That nullifies the Special Dividend totally if you're lucky, if unlucky actually diminishes the worth of your holding.
A Special Dividend does sound to me like a giveaway/return of capital, on hearing such a thing the first thing that wouldn't enter your mind is a share consolidation.
Kingalf - I was considering selling yesterday and missing out on the opportunity hoped for a spike today to sell, however I like the way you've laid it out. I have 6979 shares you have made me realise that whether it goes up or down in the short term really does not matter (my funds are in an ISA so taxes N/A), you win both ways. If the price does retrace £2.04 it is a buying opportunity (imho I think it will not go lower than £2.20). The long-term trend for TSCO is up and has been since 2016. If it does go up, I see myself selling around the £2.80 level before it retraces back to £2.30 level around this time next year. It remains a decent investment that grows steadily and pays a good dividend. Personally, I am not a fan of what the board did with the special dividend and consolidation, but let's make lemonade...
alf
that's not really the full picture. It may test the lows post XD and equally it may test £3. Pension costs will be reduced, interest on loans reduced. Online capacity increased significantly over the pandemic. The consolidation is immaterial as the reduced number of shares reflects the dividend payment. Arguably for many investors not a good strategy due to the tax implications. Reduced liquidity of the shares will benefit the company and it's shareholders as the yield from profits will be divided up into a lower number of shares. EPS will also be much better.
Of course there may be wider influences that affect the sp direction in the coming months, the markets generally across the globe are at record highs when we are in the midst of a pandemic. So lots of potential 'banana skins' but as the restrictions have highlighted, we all need to eat and TSCO is well placed as a defensive investment.
I know the SD has caused much confusion but I don't think any investor thought that the 51p was really a giveaway.
Say you own 8246 shares x price £2.40 = £19,790
Your holding will then reduce to 6510 shares x price £2.40 = £15,624.
In return you will receive 0.509p per share x 8246 = £4197 which just about equates to the loss incurred by the consolidation.
As far as I can see Tesco has been in a range of 2.45 to 2.04 over the last 6 months, apart from adding 2.5b to the pension fund and following on from the share consolidation nothing else will have changed. Personally feel these could quite easily test the lower end of the band again, unless you feel adding 2.5bn to the pension pot is enough to justify a £3 share price.
Surely 1579 shares will have the same book cost? The share price will reduce to 15/19ths but same value and the divi is extra to you?? If you’re account shows profit and you sell on Monday you have gain and divi!