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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 ..
When a dividend is paid the share price falls by roughly the same amount. In essence, your capital has been reduced but you have the difference in your pocket in the form of income, eg the dividend.
The intention of this consolidation is to keep the share price roughly the same as today ( I do not know why but hazard a guess later?) To effect this and erase the drop they give us 15 shares that remain at current price, say £2.40 for example rather than the 19 shares at £1.90 they would have been after the dividend without consolidation.
However, you are not better off because if they did nothing and didn't pay the dividend you would have had 19 shares worth £2.40 each or £46 roughly but you now have 15 worth roughly £36 but you do have the difference of ~ tenner in cash from the 50.3p dividend. Then you have dealing costs to re-employ this capital into the market along with tax costs if outside ISA or SIPP - this is definitely not a bonanza and the press should be hauled over the coals for describing it as such, it gives us shareholders a bad name.
However, it's unlikely the regime will now become more generous moving forward, what is more likely, is they will reduce the overall dividend pot by paying the same pennies (3-4p?)on the share when you had 19 but now on your new 15 shares.
Not sure i've explained very well but all the best.
See the newsfeed. What it doesn’t take into account is the much improved EPS post consolidation. Danger for those investors waiting until after the 11th is the price moves swiftly north. I will be adding more if it falls below 240p
‘ So MS screens for cheap stocks with the best EPS momentum,
with Tesco, Total, LafargeHolcim,
HeidelbergCement, Faurecia, Johnson Matthey,
OMV and Santander cheapest amongst that list.’
Loggy
You have to be on the shareholder register on the 11th Feb. The dividend payment is on or around the 26th Feb
info please I am abit dim. Is the div payed before or after the consol'
If you’re looking short term then it is a gamble holding if buying at this level. (Those liable to pay tax) You would have to hope the sp climbs closer to 2.60.
However, if you are a little forward thinking then buying at this level could be prudent, especially with market sentiment and the pandemic.
TSCO is restructuring debt, reducing pension costs and geared up online and home delivery. Booker will also benefit when hospitality opens up again. Clearly from selling a loss making business in Asia and Poland. Also the GM meeting it is proposed that TSCO can purchase their own shares.
The company are clearly cutting outgoings and looking a little ‘leaner and meaner’
Reduced number of shares after consolidation and a better EPS. Also with a healthy dividend institutions will be looking to invest in ftse companies that will cover their annuity costs.
Good luck to all investors whatever you decide to do.
DYOR as the saying goes...
Cityjambo,
As I described in my own postings a couple of days ago, I find myself in a similar predicament, although at a somewhat smaller scale - my holding of Tesco is significantly smaller than yours. Like your situation, most of my holding was bought in tranches in 2011/2012/2013 at an average of nearly £4, so if I sold now or in the foreseeable future I'd make a capital loss. However, the original buying is now, of course, history.
The special dividend for me will bring a tax charge - how it affects others will of course depend on where they stand wrt the £2,000 nil-rate threshold for this year (assuming they haven't got their shares in an ISA, etc). Also, most will lose a fraction of a share through the consolidation - unless you round-up (or down!) your present holding of the current shares to a multiple of 19.
Whilst you will, indeed, end up with less shares, they're not the same shares as you have now. They are "bigger" - each one represents a bigger fraction of the total company (so hopefully each one entitles you to a bigger share of the company's total profits/dividends).
You mention disposing of shares. As I see it you're *not* disposing of shares (unless you choose to sell), they're being in effect exchanged for "different" shares.
That's how I see it, but maybe I'm wrong!
ATB, Mike.
Sorry . .. I meant INFORMED comments!
Sorry, .... *informed* comments!
cityjambo, I've also got shares that cost over and above some years ago but they're all in my ISA now so they're not liable to dividend tax. I can choose to take the loss and invest the SD elsewhere or, as I understand it, if I reinvest in Tesco then I'll be in roughly the same position as before, allowing for a slight up or down, depending on the old share price when consolidation takes place compared to the price I reinvest at in the new shares. If the latter is lower then surely I and anyone doing this would be in a slightly better position than before? If higher, then yes, a bit worse off but nothing like the difference of the original cost. If I'm wrong feel free anyone to correct me but that's how I understand it from the notices I've received and reading others' more unformed comments.
Very welcome Rosewall, these forums can be useful and show the power of shared experiences. I am always learning from others on various boards, although sometimes they get hijacked, but so far so good with this board.
Let me first say that I wish to keep my Tesco shares. But here is my dilemma, I purchased 25000 at £4.02 some 9 years ago. I feel I am being forced to take a share reduction of 5265 shares in return I will receive a sd of £12732.50 2.42 in my eyes this equates to return of £2.42 per share a loss of £1.60 per share. The dividend allowance of £2000 is already used by the normal dividend therefore I am liable for tax @ 7.5% on £12732.50 of £954.94.
To sum up –??less shares
?? Shares disposed at loss
??To be totally disadvantaged – but have to pay tax for the privilege !!!
?? This can’t be right, somebody tell me I have got this wrong.