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There was only one winner Sainsbury’s (LSE: sbry) i Tesco (LSE: TSCO) Shares last year. The first one increased by 11%, and the second jumped by 28%. Sainsbury has a higher dividend performance, but it would not be close to completing the difference.
Which one looks like the most attractive movement? Here is my opinion.
Operational performance
In the first quarter, total retail sales (excluding fuel) in Sainsbury’s increased by 4.9%, with food sales by 5%. This period meant the highest market share since 2016, as the “Aldi price match” program and Taste the difference Premium ranges proved to be popular.
Argos increased by 4.4%, despite the tough market, and women’s clothing increased by 13%. In general, similar sales increased by 4.7%.
Meanwhile, the year -round profit perspectives remain stable, and the company sought 1 billion GBP in retail operating profit and 500 million GBP in free cash flow. Cost savings are also on the right track, and by March 2027 1 billion GBP.
As for Tesco, the leading supermarket in Great Britain recorded a 4.6% enhance in sales, with sales in Great Britain by 5.1% in a similar form. His market share now has 28.3%.
Freshly food and premium worked well with Best Sales in the range of 18%. Wholesale Biznes Booker also enjoyed a solid enhance, despite the decrease in sales of tobacco. Ireland (+5.5%) and Central Europe (+4.1%) also recorded powerful growth.
Looking to the future, the management maintained year-round guidelines, with the expected operating profit worth 2.7 billion £ -3.0 billion GBP. And Tesco continued the purchase of shares worth 1.45 billion GBP, with about a third already completed.
In low, both FTSE 100 Until now, supermarkets achieve good results this year. It is really tough for me to divide them.
Income prospects
Going to dividends, Sainsbury’s offers higher performance than Tesco shares, which is not surprising, taking into account the difference in the results of the share price. Because Tesco reached a higher level, the performance has dropped due to the opposite relationship between the price of the action and dividend performance.
This financial year ending with March 2026, Sainsbury’s is forecast to equalize 14.1 pens per share. It would be a 4% height of the year.
However, after selling Sainsbury Bank, a special dividend will appear at the top this year. In this, this payment increases to 18.5 per share, which causes a forecast by 6.1% profitability. This then normalizes up to 5% of the year later.
Meanwhile, the efficiency of the Tesco forecast is lower at 3.2%, increases to 3.8% next year.
Of course, these are only projections and are not set in stone. Dividends are never guaranteed.
On this basis, Sainsbury’s is probably a more attractive supply when it comes to low -term income. It is also a bit cheaper, with a forward price ratio to a profit of 12 compared to 14 Tesco (both for the next year).
My choice
Of course there is a risk. The main one I see is the possibility of a total price war between supermarkets. This has not yet happened, but there were a few words with the traverse of Asda’s chest about regaining market share.
The problem is that the supermarkets work with lean margins of profit, so the last thing that Tesco and Sainsbury would like is the bulky wars of the pram.
I like the leading position of Tesco on the market and future prospects for passive income. But given the risk, I do not want to add any of the stocks to my ISA.
