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I could not decide on what to do with this Special Divi since am holding in Sipp , Isa and other accounts and would have to buy back in with the Spevial Divi funds and pay the stamp duty etc.
So I decided to do the difficult thing and Sell. After all "buying is easy and selling is the difficult part". So Right or Wrong , I have bailed out today and wait for an opportunity to buy back in since I am very positive and keen on TSCO and think it has a good future.
P.S: I will from time to time still look into this chat board to read all your comments.
Good luck to all.
Regards: Jaffjoon
Thanks reader61.
I'm sure you're right on the unknowns of the impact of the Asia sale but a lot of the other impact would be there anyway. I just meant that I don't personally think we'll be any worse off going forward on future, normal dividend payouts than we would have been if the sale hadn't gone ahead. The impact of Brexit etc would be there either way so if they affect the dividend, they will have done anyway. Just my own view of course.
I've decided I'll be leaving my shares to consolidate. They're all in an ISA from past SAYE schemes or in a SIP/BAYE account and therefore all protected from dividend tax so will take the special dividend in cash to reinvest, either in Tesco or possibly elsewhere. I was thinking of selling some to diversify a bit more anyway before this came about. It's certainly not an assumption but I do still believe, rightly or wrongly that dividend payments per share will be improved after consolidation but time will tell eh? At the end of the day we've all gotta make a decision by 11th/12th based on our own holdings, opinions and comfort with risk.
Thanks for replying. Always good to hear others' thoughts and reasonings and take them on board. Be lucky.
TSCO Investment Bankers who act as their advisors...
Spindler, TSCO Investment Bank are compelled to work in the interests of the company and are regulated. I am sure the out going FCO is experienced enough to understand the advantage and disadvantages of paying a SD to it’s shareholders.
Before the GM investors can choose to stay or sell like yourself and avoid any tax obligations. Some will have their investment isa wrapped. Some may have a very good average and want to see how it plays out.
My point being that selling is not the only option for all invested here. I will review my position post consolidation as the fundamentals change.
The thing is Set4life, the dividend pot will almost certainly NOT stay the same.
There are many variables in play not least 1. The overall company is now smaller 2. profits may be higher or lower depending upon how well/poorly the Asian entity was trading 3. Profit from the sale has to be seen in the light of what was actually paid in the first place for the Asian business. 4. A commitment to pay 50% of profits depends on just how in detail the directors decide to define profit, they may make large provisions for example for additional brexit costs, spoilage of food in containers for example due to delays, higher import costs due to red tape etc - the list is endless.
Thus, I suspect the BOD will think a 4% yield is more than adequate and we will stay at that - just think it's dangerous assumption to believe you are now sharing the same pot between less shares - that pot moves like greased weasel manure I suspect.
Cheers now
Trouble with brokers Leas they always put their interests before anyone else's and it takes wise heads in a company to see right through them and show them the door. At the end of the day I don't see the interests of the owners of the company the shareholders being paramount. A sound company with profits, dividends(proper dividends not the SD) ultimately reflecting in the best share price should be the order of the day and I think they have dropped the ball on positioning things so that the share price reaches it's full potential at all times. and it's way off that by my reckoning and broker forecasts. That is a major fail in my opinion. one of the first wrong steps they have taken since Lewis restored the company. All the best
Spindler you may be right. Don't think this strategy has been thought out in the works canteen though as the BoD's have been enjoying a Costa Coffee. The company would have taken advice from the brokers and I guess with borrowing being so cheap that paying down debt was not seen as the way forward.
I'm sure investors will make the decision to buy or sell based on their average price paid and personal circumstances. Even if the sp remained the same then this would be yielding over 4% for me.
I think I will reserve my opinion on whether or not it was a good strategy to pay a dividend later on in the year. All the very best with your other investments.
Still following this out of interest and an education... I was sorting some notes this weekend from last year..and realise now with hindsight that I had let the Asia sale influence my decisions on Tesco....2.60 mark early last 12 months...dropped and then fell substantially albeit with market crash..picked up 2.48 level in August and then drifted lower....I know noone has a crystal ball but the SD to me has turned out to be a mirage it's not to my mind a SD at all....and now feel comfortable to have jumped out last week in the upper 2.40 range. It's a great company and with or without Asia I saw this at 300p or thereabouts....the SD has just muddied the waters to my mind...this is trading on par with Sbry and I see Tesco as superior in all respects....sbry in the 2 pound range and Tesco in the 3 pound range but this is not where it's at all. I can;t see this till after the dust has settled..made a profit but not what I anticipated. As soon as i heard about the consolidation I didn;t like the idea at all ! Just my observations and own opinions.....All part of the game...I was all over the silver thing but days behind the curve and it's blasted off before I made a move...hey ho. I have been impressed with Tesco moves with booker the pandemic but the SD nah not at all...wrong move in my opinion....pay down debt..buy back shares...even a close to home acquisition but a consolidation and a SD together ...too complicated for no apparent reason that I can see and that's why this hasn't gone in my view circa 300p which is where i saw it and many broker forecasts also.
To some it’s fairly good. My wife holds shares from options she bought over 21 years. She’s a non tax payer and her dividend will be taken in cash. This enables her to take her CGT allowance out as well this tax year.
Great for us because we are at an age where we want to spend rather than save.
The shares have served us well over the years apart from when the divi was cancelled.
quelfromage
As I see it, all else remaining the same..
We'll have less shares, but our future dividend payments will be higher per share and the total dividend payment on an overall par with that paid on our previously held total shares.
ie. We'll have 15/19ths less shares but conversely 19/15ths greater dividend per share making future dividend payment on our total holding roughly unaltered against what it would have been. Eg. A 4% payout becoming 5.06%.
If I were to reinvest my SD I believe I'd have roughly the same number of shares as before but a 25% higher dividend yield going forward
Happy to stand corrected!
If I were holding more then 4000 shares outside an isa wrapper, I would seriously be thinking of selling at this point. I think a lot of amateur investors out there have just focused on the dividend, thinking its a free lunch. Once reality sets in, we could well see a sell off.
Gavster
That was my plan but also contemplating buying prior to the 11th as I can see those investors, private and institutional wanting to buy in without tax implications. A difficulty one really. Market sentiment will also play its part of course.
That's why re-investing the special dividend is a good investment plan for Tesco IMO.
Rosewall, yes but we'll have less shares so, so what?
TRB
Absolutely right. This is something that I don't think everybody gets. The future dividend pot will be divided by fewer shares resulting in a higher dividend per share. This is easily monitored in the future.
Morning All
I get the feeling no matter what happens with the SD/consolidation,some will be happy,some will complain and others will not understand and take whats on offer.
At the end of the day,no one is forced to invest here.If money is better served elsewhere,off you go.
Oooh good one I never thought of that if they keep the dividend the same they’ve saved %20 on there dividend pay out !
But they are committed to paying out 50-51% of profit so if the profit stays the same and there’s less shares am I right in thinking 9.2p would become 11.4p ? Food for thought their at least for the grey matter
Didnt Tesco sell and lease back their stores to raise funds to make these foreign acquisition in the first place. Having now sold the investment, surley the most prudent thing is for the funds to go back into the business. Their actions are very short term thinking , and have done the equivalent of equity release on a property.
This could well harm the share price in the future especially if the likes of Morrison are eventually taken over by Amazon.
You have explained it well Reader61, just an additional note (apologies if already covered) if you don't hold these under an ISA wrapper you will have to pay additional tax on any dividends you recieve over £2000 ( dividend income is separate from your capital gains tax allowance). The majority here will be aware of this but there is no harm in repeating if it helps.
Nat West, that was good, I must it admit to being chuffed to bits when I bag a quid from a shopping trolley.
£1 is a profit
Nope, I'll google it.
The consolidation will reduce the yearly dividends paid out unless boosted. The SP may increase in the next years. EPS should increase. IF the directors' bonuses depend on EPS then who else might be a beneficiary?. We may not lose out with this Spec Div, unlike with WTB whose directors decided to buy back shares at the top of the market instead of a cash divi form Costa sale, wasted later as the SP more than halved.
You not seen the advert where the young girl gets the £1 then?
***kin robbing barstewards I'm going to rob the trolleys that still have a quid in them from every store.
I feel it was a week of wasted chances, with hindsight 250p was a good price but I had a target of 260p, hopefully get more chances next couple of weeks ..