Tesco (LSE: TSC) shares have actually delivered. They’re up 27% over 12 months and 75% throughout 5 years. The UK’s greatest grocer has proven chunk after shedding its approach beneath former boss Philip Clarke, with constant success for the final decade.
It’s now probably the most strong performers on the FTSE 100. At any time when I verify the Tesco share value, it appears to be quietly doing its factor. In fact, there was the odd bump. The shares took a knock after Donald Trump’s so-called ‘Liberation Day’ tariffs, regardless that Tesco wasn’t immediately affected.
It quickly bounced again and is now dismissing the market jitters brought on by rising tensions between Israel and Iran.
Regular good points
Tesco has already seen off Brexit, Covid, the cost-of-living disaster, and the apparently unstoppable rise of Aldi and Lidl. In response to Kantar Worldpanel, it now holds a 28% share of the UK grocery market, its highest in a decade. That’s effectively forward of Sainsbury’s, which sits at 15.1%.
Its newest buying and selling replace, revealed on 12 June, confirmed UK meals gross sales up 5.9% in Q1, with non-food gross sales up 6.2%.
Gross sales throughout all channels have been rising, led by on-line, the place income jumped 11.5%. Buyer satisfaction improved too, whereas Tesco held its value place due to Aldi Worth Match on 600 strains, 1,000 low on a regular basis costs, and round 9,000 Clubcard offers every week.
It’s not straightforward being high canine, however this can be a sturdy exhibiting.
Dividend progress
Tesco has served up a dependable stream of revenue too. The trailing yield is at present 3.46%, which is down barely as a consequence of current share value progress.
In 2025, it paid a full-year dividend of 13.7p, up 13.2% on the earlier yr’s 12.1p. Over 5 years, payouts have grown at a compound annual fee of 8.41%. That’s not unhealthy going.
There have been flat years, although. The dividend was frozen each in 2021 and 2023. Analysts count on it to remain flat at 13.7p in 2026. After that, they’re forecasting 15.1p in 2027 and 16.1p in 2028, lifting the projected yield to 4.4%.
So, this isn’t a very free lunch. Some years provide a lighter portion than others, however it’s nonetheless tasty.
Valuation and verdict
Tesco can also be returning money to shareholders by way of buybacks. Since 10 April, it has repurchased £448m of shares beneath a £1.45bn programme set to run till April 2026.
The present price-to-earnings ratio is 14.2, which appears to be like cheap given the inventory’s current type. Analysts now count on slower progress although. The 12-month median forecast stands at 414.6p, suggesting a modest acquire of round 5% from right now’s degree, with dividends on high.
9 out of 16 analysts nonetheless label it a Sturdy Purchase, with one other three on Purchase. Just one says Promote. That’s encouraging, however no firm is bulletproof.
Margins stay wafer skinny at 3% to 4%, and the grocery sector is brutally aggressive. Sooner or later, Asda or Morrisons may get their act collectively, which might take a chunk out of income. Aldi and Lidl will maintain urgent. A future Tesco boss may additionally get it incorrect, as Clarke as soon as did.
There’s a saying that the one free lunch in investing is diversification. That also holds. Tesco shares aren’t risk-free. However I nonetheless suppose its shares are value contemplating right now.
