Tesco Share Chat (TSCO)

There is for new investors just experiencing the understandable confusion over a give on one hand - and take with the other. Something Government practices when determining budgets. The natural thought would be to wonder whether the imminent final results and subsequent final ( larger than interim) dividend will defray any losses on the SD /Consolidation action. When I started investing in shares, I thought I'd got a pretty god grasp of it - UNTIL I came across an SD/ consolidation on one of my investments and it was brain bummer fully understanding it. I came eventually to the conclusion that it was the opposite of a rights issue, which effectively dilutes shares with an inevitable reduction in share price. Maybe that's the way to look at SD/ consolidations in a clearer light?

Norrab: I'm with you on that.
That is despite the embarrassment Tesco have given its shareholders with its double charging of customers paying by card at the till. (Argument currently raging on Money Supermarket) And it's unnecessary delay in refunding those affected in these Covid related financially strained times! It gives a terrible image to loyal customers of which I am one naturally as I hold shares.
I'm dead against the current movement to a cashless society with cash points closing down. Doubtless it's Government encouraged.
If there ever was a big illustration of the imperfections of paper recorded transactions, then this scandal would be it. Add to that the certainty you will never get a loophole free card payment system for the fraudsters, I'm sticking to cash for Tesco payments. They can not ask me for it twice once I've exited the store, and if they did, that's the last time they would see me as a customer. I'd be down the road to the nearby Aldi or Lidl. Take note Tesco!!

I stand by my 280p+ this year along with the standard yearly divs circa 5%

This is absolutely daft. You all had just short of a year to do whatever you want to do. It is just a tad late to complain now. Most people on here understood the deal.

lun
'How much better off will you be with the final Dividend ?

Bye, back to big head school?

How much better off are you with this special Dividend ?

Will look back in in a few months time no value in reading 90% of the posts here .

People seem to be getting hung up that they have been fleeced by Tesco by some nefarious means. This isn't the case and as others have alluded long term holders have had the best part of a year to decide what is best for them, so no excuses really.

This is a defensive stock offering over time a safe haven for your cash with little threat to your investment. Coupled with regular and growing dividends. It could be described as a dull plodder in recent times. However, every portfolio should contain a stock of this type in some capacity.

If you are hoping to make a quick buck or are happier to day trade its not for you. Risk it in a crypto share like ARB.

If you are patient and happy to wait for growth i believe Tesco will reward you in the months ahead.

Hi Mane, yes luckily I bought in at 219p and thats why I am approx £600 up over all on todays prices. However, for those who took prices North of 230p and into 240p's I dont think that the result will be as positive. Again, all my calculations are a simple comparison in terms of what did I originally pay vs whats it worth today. All other if's,but's and maybe's will take their turn in coming into todays price calculation (ie if SP goes up/down, or increased divi's etc) but for clarity of thought as a simple man I do my calc's based on whats known (my spend and return), its less complicated then to decide what next move is. As I am up presently I will hold longer as I am intrigued as to what the next divi position will be. Previously believe it was a 6.33p divi and if I am to make up for my lost 25% of holding and to get same divi then TSCO need to offer a 9p dividend. In itself not a massive jump, but it is 25% divi increase in its own right...... lets see. I do have a few other stocks the like's of TSCO, a bit of a plodder, and I want to get something a bit more exciting ...... where's that cryptocurrency investment manual when yo need it!!

touched 250.7p on 27th Jan

MANE
No doubt those that have sold or will be selling in the very near future. I think by the end of the month investors will have a better informed opinion as to whether or not the SD was the best strategy.

Mane
I would say that there was a last minute sell off, with people worried about tax - resulting
in about a 9p drop, which is why I purchased on Friday.

credit given to me yesterday on a Tesco SB position held in my IG account

I assume as long as you bought in oringinally below 2.43ish you shouldn't be out of pocket but before I rush to buy back to my original position I wonder how much of the increase in SP recently was driven by people expecting some sort of pay out?

Or, the special dividend is cancelled by the reduction in shares held post consolidation. In short to effectively stand still you probably need to reinvest the SD via DRIP so that you end up with same number of shares pre SD/Consol with a small gain which SHOULD (see "jam tomorrow" comment earlier) generate greater future dividend payment due fewer shares / same or increased divi pot scenario. Depends which way you want to cut it... but bottom line is, you didnt get the SD in full as you lost 25% of holding at same time. Its again your choice if you accept that SP would have fallen by 51p on EXD argument and would now be holding same no. shares at approx 190p ....... Tigra's needless muscical chairs comment is a fair assessment...... All i looked at was what did I spend initially on TSCO shares, then I recalculate my new holding at todays price (244p) and add my SD to the total. As its approx £600 above my initial spend I consider myself marginally happy, but would have been happier with the full 51p SD of course, but accept I would then have to live in short term with a SP fall on EXD calculation. So, it really is a personal position at the end of the exercise and tinged with do you expect SP growth and better divi's in future (same for all investments am sure!). The only impact i dont comment on is the tax position , as it should be in an ISA or SIPP wrapper if a sizeable amount. My focus now is past SD/Consol and what will upcoming reports show as trading results and will this make up for the SD/Consol shenanigans ......... lets hope as I am sure we will all have holidays in the sun to pay for !

Just to make it clear to relatively new investors - If a company pays a dividend (special, ordinary or final or even quarterly) then the share price would ordinarily drop on ex dividend date. The day before ex dividend date is the qualificatiob date which is the last day you have a chance to a right tp the dividend.
The share price does not drop after "payment date" because the adjustment downwards in market capitalisation has already taken place on the earlier ex dividend date.
The downwards adjustment in share price occurs in the case of NO consolidation. Normally special dividends do not involve share consolidations. But this is not the case with this Tescos SD - so no reduction in share price.
As others have said. the share price could well rise if enough Tesco shareholders want to reinvest their SD to maintain the level of their pre consolidation holding.
I hope this makes it additionally clear for our newer investors who have not experienced the rarely occuring SD/ consolidation issue previously.

DT#
Quite right. Not many high yielding companies on the footsie if the banks continue to withhold dividends due to government guidance. Pension funds looking at covering annuities.

Leas - I agree. I think this was a driving force when the BOD were making decisions about what to do with the Asian sale money. If the dividend payout increases and we become a 4-5% yield stock then we become very investable for the big ii’s - especially as there should also be organic growth in the SP purely based on trading performance

Well put Risewall.

Don't know about anyone else but I've just bought back to my previous holding, can't be doing with a strange number of shares, I suspect many will do the same.

Sydney

This may help with a bit of understanding of where your new shares are likely to be a positive in the near future, I posted it yesterday I think in response to a question from another poster:

The shares are (supposedly according to HL) opening at circa £2.40 tomorrow. This is due to the consolidation from 19 to 15. It is in effect identical to an opening price of circa £1.88 if the shares were not consolidated.

Yes we will receive a higher dividend in future but we have had our shares reduced in number so it is again no different in cash terms. The dividend amount declared by Tesco is divided equally to all shareholders based on number of shares we hold as we all know.

Example: If you start with 1000 shares and the dividend is 10p per share you are paid a dividend amount of £100.00. If they consolidate your shares and you end up with 800 shares you would need a dividend of 12.5p to achieve the same £100.00 in cash terms. Yes it may look good for the dividend to seemingly raise to 12.5p per share from 10p, but due to the consolidation it is identical and therefore no better or no worse for us shareholders.

To benefit from the consolidation, Tesco would need to declare an actual increase in future dividends so that shareholders benefit from any of this. As of tomorrow there are less shares in issue so the positive is that in future our earnings per share should increase which will hopefully be passed on to us in the form of a stronger dividend. The board can explain this in their own way on a conference call and no doubt they will make it sound reasonable because they are trained sophists. My gut just doesn't like what has happened and it feels like subterfuge to me and that's why I'm disappointed.

I will give them the benefit of my considerable doubts and hopefully we will all be rewarded with an increasing share price and a progressive dividend starting at 8 bells tomorrow. That's the reason I'm invested here and I imagine there are at least a few others of the same mind with similar reasons for investing here.

Hope that makes sense.

All the best

Yes mate, basically it's been a game of needless musical chairs and you end up back on the same seat.........However some have a sore ass now.

Have a look at the message I re-posted earlier today, it shows how Hargreaves Lansdown implemented the share consolidation. Down the page from earlier this morning.

All the best

see my earlier posts regards robbing Peter to pay Paul. The SD actually isnt as you lose 25% of your holding going forward. The share price hasnt moved from its 240-245p range pre/post consol. So its how you cut your numbers. Some advise that the SP would have fallen on exd by same amount of SD which is hwre the 189p figures come from, but SP was maintained at approx 243p, so there is a "win". There are a number of "jam tomorrow" statements regards dividend increase as fewer share in circulation share same/bigger divi pot, and the beter financed organisation should be more attractive to investors and hance see SP gains . Your choice if you go with jam tomorrow. My concern is that despite all the thousands of posts on this consol / SD episode, the market will dictate te SP and hence the effect all this has had personally. The bottom line remains that you dont get the full SD in your pocket, you reduce the SD by the effect on your holding at todays price.
example pre SD/consol 2550 shares held at £5610 purchase price (thats my profit / loss line). Post SD/Consol 2013 shares at 244p = £4911 PLUS £1300 SD = £6211 - £5610 = £601 profit ON INITIAL OUTLAY. However, again the issue is DRIP or CASH take. If cash, you are then open to holding fewer shares and hence possible lower future dividends. Its a marginally better than standstill position and I for one wish BoD at TSC had been so much clearer on the netting out final position. Hope that helps clarify.

bluerose (and others)

You, and only you, are responsible for your investments and tax situation. There can't be many investors who are unaware of the ISA and SIPP tax wrappers. If you are having to pay dividend tax then it is yours, and only yours, decision not to mitigate and tax disadvantages. There should be no one paying dividend tax. If you had used up your ISA allowance then you can pop it into a SIPP. This deal was announced in March 2020, almost a year ago. Every investor has had a year to resolve this, there really isn't any cause for complaint.