How Tesco PLC Could Help You Retire Early

The Motley Fool

Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US) may be going through a tough time at the moment, with the UK food retail environment proving to be as tough as ever.

Indeed, recent results did not go down too well, with many investors appearing to lose faith in the business and in the strategy employed by senior management. As such, shares have fallen heavily in recent weeks.

However, the company could be one of the best bargains on the FTSE 100 at the moment, judging by its current share price level, and could bring retirement a step closer for its shareholders.

Indeed, Tesco is currently near to an all-time low, with shares changing hands for as little as 330p each at the time of writing. Of course, it has been lower before -- in 2012 when the company was struggling to put out the Fresh & Easy fire. However, with Fresh & Easy now gone, it does seem as though management can focus on turning the business around and on building a viable growth strategy for the UK and rest of world operations.

Incidentally, Tesco's share price responded well after being below its current level in 2012, with gains of close to 30% being posted within a year. The only time Tesco has been at such lows prior to this was in 2006, when shares were near the beginning of a bull run that took them close to 500p each.

Such levels may seem like a long way off at the moment but, with the environment in which Tesco operates being at a low ebb, now could be a good time to buy in anticipation of another period of share price growth.

In addition, despite Tesco clearly experiencing a difficult period, it is set to increase its dividend per share at an above inflation rate. Indeed, dividends per share are expected to be 15.32p in the year to February 2015, up from 14.8p per share in the current financial year.

This may not sound a lot but, in addition to being ahead of current levels of inflation, it also means that a yield of 4.5% could get even better in future. With inflation and low bank savings rates likely to be a major concern of yours, such a yield and growth rate could prove to be a very useful addition to your portfolio, as well as helping to bring retirement one step closer.

While on the topic of income, inflation, retirement and low bank account savings rates, there is a company that you really must take a closer look at.

It offers a 5%+ yield and could be a great addition to your portfolio as a result of its relatively high degree of stability, earnings per share (EPS) growth prospects and the aforementioned income it offers.

With the economic climate still appearing to be fragile, such a company could provide a major boost to your portfolio.

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