Tesco on track for full recovery
Ed Meier, manager, Old Mutual UK Equity Income Fund, Old Mutual Global Investors
This morning Tesco reintroduced an interim dividend of 1p for the first time since its accounting scandal in 2014/5. This should equate to around a 3p dividend for the whole year. While we anticipated this return to the dividend list, we still consider this a strong indication from the company that it is indeed on track for a full recovery. We also see that there has been an agreement with the pension fund on future contributions, giving further visibility and confidence around future cashflows – from which we derive our dividend.
“We have, for a long time, liked the prospects of Tesco’s new strategy under CEO Dave Lewis which he says this morning is “firmly on track” to deliver. These results give confidence in underlying potential for earnings, cashflow and, yes, dividends.