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The Tesco (LSE: TSCO) share worth has risen 17% up to now in 2025, and it gained a few p.c early Thursday (2 October) on first-half outcomes. Regardless of competitors from cut-price cheapies, Tesco posted yet one more UK market share acquire, to twenty-eight.4%.
A 5.1% rise in adjusted first-half gross sales lies behind the feat, and we’ve now seen market share beneficial properties for 28 consecutive four-week durations.
Adjusted headline measures had been up throughout the board — apart from debt, which is down, in order that’s good. Web debt fell 3.8%, whereas adjusted earnings per share (EPS) gained 6.8% with free money move up 2.9%.
Statutory figures had been much less spectacular, with EPS on a seamless operations foundation down 2.7%. However CEO Ken Murphy is “pleased with our first half performance.” I anticipate most Tesco shareholders shall be too.
Dividend increase
The board raised the interim dividend 12.9% to 4.8p per share, and that’s key for a lot of long-term Tesco traders. If the identical enhance is repeated at full-year time, we’d be taking a look at a 3.6% dividend yield based mostly on the present share worth. It will be effectively forward of the three.4% year-on-year enhance at the moment predicted, so dealer forecast upgrades could be on the playing cards.
Final yr’s dividend was litself lifted 13.2%, and that’s the sort of factor I’m in search of as a long-term investor. A strongly progressive dividend might be value much more over the many years than a short-term increased yield that may’t be sustained.
Dividends are by no means assured, not even at Tesco. And the Tesco dividend went right into a reset in 2016. However since then it’s been rising steadily. And Metropolis analysts anticipate it to maintain on going — lined shut to 2 occasions by earnings.
Tesco has a dividend reinvestment plan, which I at all times wish to see. It means traders can plough their dividend money into new shares with out having to pay charges on the open market.
Outlook
In its outlook replace, Tesco reminded us of the largest hazard to its market dominance. “In April, we noted an increase in the competitive intensity of the UK market,” the corporate stated, including “competitive intensity remains elevated.”
However even in opposition to that background, the board upped its full-year revenue steering. We should always anticipate adjusted working revenue to come back in between £2.9bn and £3.1bn — from earlier steering for £2.7bn to £3.0bn.
Free money move must be “within our medium-term guidance range of £1.4bn to £1.8bn.” That issues me slightly, contemplating final yr’s determine of £1,750m was forward of the mid-point of that vary. And it was effectively under the earlier yr’s free money move determine of £2,063m.
Verdict
Stress on money move needs to be a results of the famous intense competitors and provider value inflation. And I believe it’s the important thing danger to look at for within the medium time period. If something is more likely to dent the dividend, it needs to be money move weak spot.
However do I believe traders with a decade-plus horizon ought to take into account shopping for Tesco shares? Sure — as a possible bedrock element of a diversified Shares and Shares ISA.
