Sainsbury (j) Share Discussion Threads

[clive7878] 18/3/2023 20:40

72 Weetabix - Sainsbury £8.00 Farm Foods £5.50
Lindt cocoa
chocolate - Sainsbury £2.45 Asda £1.60
We are not matching the prices here by a long stretch

[loganair] 17/3/2023 11:04

Something’s wrong with the case for investing in Sainsbury’s for its shareholder dividend, but the stock still has its attractions:



City analysts following supermarket chain J Sainsbury expect the dividend to decline by just over 7% next year.

And if that happens, it will be a blow for shareholders who are in the stock for income.

But why is it likely to happen? After all, those same analysts have pencilled in modest growth in revenue for the current trading year and for the following period to March 2024.

Earnings on the slide:

However, the reason for the decline looks like it’s because the level of the dividend is tied to earnings. In last year’s full-year report, the directors said the dividend payout ratio was running at around 53% of underlying earnings. And they had an ambition to raise it to 60%.

But earnings are on the slide, by just over 3% this trading year and by almost 8% the next. So the analysts look like they are tracking those declining profits lower with their dividend predictions.

This is not good news. When entering into dividend-led investments, I look for rising financial figures. And that means identifying a stream of rising dividends backed by a business capable of delivering annual upticks in revenue, earnings and cash flow.

For me then, J Sainsbury now fails that fundamental test. Profit margins are caught in a pincer squeeze between rising costs and pressure to keep selling prices down.

For example, staff wages have been rising. And cash-strapped customers can choose to shop elsewhere if Sainsbury’s prices become too high for them.

The company is facing the problem of competition head on. And it price-matched rival supermarket Aldi on around 300 products. But such initiatives tend to bear down on profits. And that means lower dividends for shareholders given the current dividend policy.

This is not the dividend progression I’m looking for, it’s dividend regression.

The yield remains high:

But there are positives in the business. On Tuesday, the company announced a deal to buy the freeholds of 21 of its supermarkets for just under £431m.

The stores are currently leased from investment vehicle Highbury and Dragon and are among 26 Sainsbury’s supermarkets in the portfolio. But the company already owns 49% of Highbury and Dragon. And the new deal will see J Sainsbury buy the remaining 51% from Supermarket Income REIT.

The move looks set to reduce ongoing rent costs. And the directors plan to sell the remaining five stores in the portfolio. But the benefits may prove to be small overall. And that’s because the company operates more than 600 supermarkets and about 800 convenience stores.

Meanwhile, even with the dividend set to decline, the forward-looking yield is still an eye-catching 4.8% for the current trading year. But it may go higher if the stock continues to fall in this difficult market. As I write, the share price is 256p.

But any supermarket stock making it into my portfolio must have a current yield of 5%, or higher. And there must also be dividend growth forecast ahead.

For me, that kind of return is needed to compensate for the risks of holding the shares. After all, supermarket businesses are low-margin, high-volume enterprises. And they face stiff competition, which adds risks for investors.

[smurfy2001] 14/3/2023 23:17

Sainsbury's seals £431m deal to buy freeholds of 21 of its stores from Supermarket Income REIT



Sainsbury's will buy the freeholds of 21 of the premises it previously rented, which will continue to be run as Sainsbury's stores. The remaining five will be sold, four of which it will lease back.

[philanderer] 14/3/2023 14:46

Sainsbury's seals £431m deal to buy freeholds of 21 of its stores from Supermarket Income REIT

[tim 3] 12/3/2023 21:58

Does not surprise me where as before supermarkets were really cautious about increasing prices the opposite appears to be true now almost feels like a challenge to see who can get away with the biggest increases !

[bountyhunter] 12/3/2023 18:02

At least Barclays have a 280p price target! They all seem to be oblivious of Bestway.

[smurfy2001] 12/3/2023 16:37

Tesco finest baby potatoes are good. M&S do great baking spuds.

[spob] 12/3/2023 08:08

I thought Tesco were the same

[johnboaz] 12/3/2023 01:50

simple buy your spuds from tesco

[spob] 11/3/2023 19:37

Anyone know which retailers still put best before dates on their potatoes.

I don't want to buy stale potatoes from Sainsbury's anymore.

[spob] 09/3/2023 16:38

Don't go to the store if you want this drink

phone the store directly, and ask if they have it

no point wasting your time

[loganair] 06/3/2023 19:35

Co-operative Bank finds Sainsbury's un-cooperative over £650m mortgage deal:


The Co-operative Bank and Sainsbury's Bank have called off talks about a £650m mortgage deal after failing to agree on a price for the supermarket-owned portfolio.

A sale process, has been under way for some time.

It was unclear on Monday evening whether Sainsbury's Bank was proceeding with another party or discontinuing the sale process.

The auction has been run by advisers at Deloitte.

Starling Bank also expressed an interest but withdrew from the auction months ago, the insider added.

A sale would herald Sainsbury's Bank's formal exit from the UK mortgage market after it ceased new lending in 2019.

[bountyhunter] 06/3/2023 17:52

They seem to be a bit behind the curve :)

[philanderer] 06/3/2023 14:24

Jefferies raises Sainsbury price target to 270 (230) pence - 'hold'

[philanderer] 05/3/2023 00:18

Sainsbury’s convenience stores reach £3 billion sales milestone

[dipa11] 04/3/2023 21:57

hTtps://m.marketscreener.com/quote/stock/J-SAINSBURY-PLC-9590189/news/J-Sainsbury-Moda-New-York-Square-in-Leeds-gains-a-new-Sainsbury-s-Local-43140458/

[bountyhunter] 04/3/2023 20:53

Stock pick: Tesco vs Sainsbury’s