By Robert Sutherland Smith | Friday 9 January 2015
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
I suggested here some time ago, that the Tesco (TSCO) dividend payout looked vulnerable, so news that the company will not be paying a final dividend is not surprising. Last year to February 28 2014, the company reported £2.8 billion of operating cash, most of which went in to capital expenditure (£2.88 billion) leaving the annual dividend cost uncovered by operating cash. So the decision to cancel the final dividend and reduce annual expenditure to an annual amount of £1 billion by next year looks logical and rational – and thus I would of thought, encouraging to markets and potential investors.
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