As the UK’s largest supermarket chain, Tesco (LON: TSCO) is home of the Clubcard (and annoying loyalty prices), but it dominates British groceries with strong pricing power and an extensive network of stores all over the country. Investors often look to buy Tesco shares to reap a steady dividend and make the most of its defensive nature.
Although you might want to start stocking your portfolio’s shelves with Tesco stock, bear in mind that razor-thin margins and intense competition from other supermarkets create ongoing challenges. Find out all the key details about buying Tesco shares and where you can invest in this dividend-paying stock.
How to buy shares in Tesco
Open a brokerage account.Choose from our top broker picks or compare brokers in depth. Then, sign up on your chosen platform.
Fund your account.Add money to your account via bank transfer or debit card.
Search the platform by ticker symbol.TSCO in this case.
Choose an order type.Place a market order (or limit order, if you want to try to hold out for a specific price) with your preferred number of shares or investment amount.
Submit the order.It's that simple.
The whole process can take as little as 15 minutes. You'll need a smartphone or computer, an internet connection, your passport or driving licence and a means of payment.
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Tesco is the third-biggest retailer in the world by gross revenue.
Frequently asked questions
Yes, Tesco employees in the UK and Ireland can buy Tesco shares as part of the company's Save As You Earn (SAYE) scheme. This scheme lets Tesco staff save money and then buy shares in Tesco at a discount price each year. Employees that join the scheme have a nominated amount taken out of their pay, which is then put into a SAYE account held by Barclays. At the end of the saving period (either 3 or 5 years), staff can then choose to buy Tesco shares at a discounted rate, known as the option price. Staff also have the option to withdraw the money at any time. Employees can access and apply for the share scheme via the ESP portal. Applications generally open in October and close in November each year.
The Tesco share price has been very volatile in recent weeks, but has rebounded from its drop as a result of the coronavirus stock market crash. According to investing publications like IG and the Motley Fool, now may be a good time to buy Tesco shares as consumer demand for groceries has risen sharply as a result of the coronavirus pandemic. HSBC analysts also recently upgraded Tesco's stock rating from a "hold" to "buy" based on the market's belief that the company will perform well in 2020.
Forward annual dividend yield: 3.16% of stock value
Dividend payout ratio: 1.78% of net profits
Tesco has recently paid out dividends equivalent to 3.14% of its share value annually.
Tesco has paid out, on average, around 1.78% of recent net profits as dividends. That has enabled analysts to estimate a "forward annual dividend yield" of 3.16% of the current stock value. This means that over a year, based on recent payouts (which are sadly no guarantee of future payouts), shareholders could enjoy a 3.16% return on their shares, in the form of dividend payments. In Tesco's case, that would currently equate to about 14.3 per share.
While Tesco's payout ratio might seem low, this can signify that the company is investing more in its future growth.
Tesco's dividend yield is perhaps best considered in relation to those of similar companies.
It's as easy to sell Tesco as it is to buy! Here's how to sell Tesco shares that you already own.
Open your investment app. If you've got one with desktop access, you can log in online
Go to your portfolio. This should be in the main menu
Find your shares. You may be able to search your portfolio
Choose how many you'd like to sell. You'll be able to review the price and see how much you'll receive
Sell your Tesco shares. Your investment platform will let you know when your shares are sold
Most dealing providers will let you use your debit card to top up your account and buy shares. The main ways are with a debit card, bank transfer or with Apple/Google Pay.
The easiest way to get hold of some Tesco shares is to sign up for a share trading app and place a market order or basic order. This type of order tells the platform that you're interested, so it'll try to execute it as quickly as it can. It could take some time for the order to go through, especially if there's a lot of volatility in Tesco shares.
George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers.
He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active.
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