Tesco Dividend History indicates steady dividend increases

Tesco Dividend History

Based on Tesco dividend history table below we can show you why from an income investing perspective Tesco is an example candidate.

Tesco is one of a select few companies which has an unbroken record of more than 20 years of above average dividend increases! However, we are focusing on Tesco's dividend performance since 1999.

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Tesco - an example company!

Suppose you bought 1000 shares in Tesco during May 1999. The group's share price fluctuated during that month between £1.73 and £1.90. Lets pick a date, say May 19th, when the closing share price was: £1.82 Excluding stockbroker commissions and any taxes, you therefore paid a total of £1,820.

Click here for a write up on holding Tesco shares as from May 2005.

Year ended	Interim	Final	Total	Growth %
End February	Dividend	Dividend	Dividend
2010	3.89	9.16	13.05	9.1%
2009	3.57	8.39	11.96	9.7%
2008	3.20	7.70	10.90	13.1%
2007	2.81	6.83	9.64	11.7%
2006	2.53	6.10	8.63	14.5%
2005	2.29	5.27	7.56	10.5%
2004	2.07	4.77	6.84	10.3%
2003	1.87	4.33	6.20	10.7%
2002	1.67	3.93	5.60	12.4%
2001	1.48	3.50	4.98	11.2%
2000	1.34	3.14	4.48	8.7%
1999	0.42	3.70	4.12	6.5%
1998	0.39	3.48	3.87

Let's first check the dividend yield for 1999?

You would have received a dividend of 4.12 pence per share for 1999. Now divide your dividend of £0.0412 a share by your original purchase price of £1.82 and multiply with 100 and your (prospective) dividend yield at the time amounted to a lowish 2.3 per cent (2.26 per cent to be precise).

Since, according to the Tesco dividend history table, the Group has been paying a dividend consistently for the last eleven years - in fact:

Tesco has increased it's dividend by an average of
11.1 per cent every year!

And what's happened with your dividend pay-out?

Based on the Tesco dividend history table we can calculate that its dividend pay-out has more than tripled since 1999 to £0.1305 per share

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What has happened with your annual yield based on your initial purchase price?

You bought Tesco shares in May 1999, paying £1.82 a share. Eleven years later, you’re receiving a dividend payment amounting to £0.1305 a share. Again, divide £0.1305 a share by your original purchase price of £3.09 and multiply with 100:

Your effective yield is now almost 7.2 per cent

As long as Tesco is able to keep boosting its dividend, and you keep holding the shares, there is no limit to how high your effective yield can go.

And what about Tesco's share performace?

Remember 1999, in our example above, we were able to purchase Tesco shares at £1.82 Today – 17 September, 2010 – the shares closed at almost £4,29

Until mid November, 2007, Tesco's shares have been rising steadily, topping at £4.92 per share (November 14th, 2007). Since, the shares have been rather volatile, going as low as £2.86 per share, a year later (November 21st, 2008). During 2010, Tesco’s shares were trading in £3.68 - £4.55 range.

Let me summarise this for you:

if you had purchased 1000 Tesco shares over eleven years ago, at £1.82 per share, your overall cost would have been £1,820 (excluding purchase costs)
the dividend payout has more than tripled from £0.0412 for 1999 to £0.1305 for 2010
whilst the share price has more than doubled to £4,29 at closing September 17th, 2010 (ranging between £3.68 – £4.55 per share during 2010).

After eleven years of holding your Tesco shareholding of 1000 shares:

your shares are now worth approx £4.29 per share
your total shareholding is now worth £4,286.50
you have received dividends totalling £1,716, almost as much as you have paid for the shares
for 2009, you have received an annual gross dividend payment of £0.1305 per share, totalling £130.50
providing you with an effective dividend yield of 7.2 per cent.

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What else can I say?

From an income perspective, owning shares in a company such as Tesco seem to tick all the boxes. Over the years, Tesco has offered its shareholders a . . .

Stable Annualised Dividend Growth Rate!

Before we consider the sustainability of Tesco's dividend and its growth prospects, it's a good idea to first consider what's happened so far.

20-year	15-year	10-year	5-year	3-year
Annualised	Annualised	Annualised	Annualised	Annualised
Growth Rate	Growth Rate	Growth Rate	Growth Rate	Growth Rate
11.94%	10.66%	11.32%	11.62%	10.64%

Over the last twenty, fifteen, ten and five years Tesco's annualised dividend growth rate has been relatively stable, averaging 11.38 per cent, whereas the last three years the annualised dividend growth rate has decreased somewhat to still a very respectful 10.64 per cent.

While we believe that the dividend is unlikely to be cut anytime soon; due to benign inflation rates, we do not expect double figure dividend growth rates either going forward. More a high single-digit rate.

If, indeed, Tesco continues to increase the dividend payout by (a conservative?) 7.5 per cent each year, your annual yield on investment of 4.2 per cent will grow to 4.5 per cent (£140) and the following year to 4.85 percent (£150), etc.

What About Tesco's Dividend Growth Rates?

I would like to refer to Todd Wenning's excellent write up regarding the sustainability of Tesco's dividend and growth prospects.

Be notified when we have updated Tesco's dividend prospects. Subscribe to our free Dividend Alerts service.

Click here for a write up on holding Tesco shares as from May 2005.

Return to Tesco for more recent information on their dividend policy.

Return to Dividend Risers for information on other companies with an amended dividend policy.

WE WOULD LIKE TO POINT OUT, THAT:

1.√the above mentioned Dividend History table is solely an example of a UK listed company's dividend history and is not to be construed as a share recommendation. Neither Early Retirement Investor nor EMAR Publishing are registered as an investment advisor or as an independent financial advisor and do not provide individualised advice

2.√the price of shares and investments and the income derived from them can go down as well as up, and investors may not get back the amount they invested

3.√where the information consists of pricing or performance data, the data contained therein has been obtained from company reports, financial reporting services, periodicals, and other sources believed reliable

4.√data computations are not guaranteed by Early Retirement Investor.com or any of the data providers and may not be complete.

5.√The editor or contributors may have an interest in the share mentioned.

6.√Dividend yields move up and down. As a company’s share price increases the dividend yield falls. And vice versa: if the share price falls the dividend yield increases.

Click here for an overview of Tesco's dividend record as from May 1999.

Return to Rising Dividends for announcements from other companies with an amended dividend policy.

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Tesco Dividend History

Tesco - an example company!

Let's first check the dividend yield for 1999?

Tesco has increased it's dividend by an average of
11.1 per cent every year!

Your effective yield is now almost 7.2 per cent

And what about Tesco's share performace?

Stable Annualised Dividend Growth Rate!

What About Tesco's Dividend Growth Rates?

UK in Crisis!

Building Wealth

Investing

Retirement

Dividends

Dividend Risers

Investment Resources

Admin

Tesco Dividend History

Tesco - an example company!

Let's first check the dividend yield for 1999?

Tesco has increased it's dividend by an average of 11.1 per cent every year!

Your effective yield is now almost 7.2 per cent

And what about Tesco's share performace?

Stable Annualised Dividend Growth Rate!

What About Tesco's Dividend Growth Rates?

Tesco has increased it's dividend by an average of
11.1 per cent every year!