Tesco (LSE: TSCO) outperformed the FTSE 100 over the three years from late 2023 to late 2026, based on estimated share price returns. Tesco shares more than doubled, rising roughly 110% to 115%, while the FTSE 100 gained an estimated 30% to 40%. That put Tesco ahead by about 70 to 85 percentage points, before dividends on either side.
The gains came as Tesco defended its position in UK grocery with Clubcard Prices and Aldi Price Match while growing profits. Adjusted operating profit rose to about £3.1 billion in the financial year to February 2025, from about £2.8 billion a year earlier. Tesco also raised its full-year dividend from 12.10p to 13.70p per share, adding to what shareholders earned from the rise in the share price.
What Drove Tesco’s Share Price Over the Past 3 Years?
Tesco gained ground in UK grocery. Its market share reached about 28.4% during the period as it competed with Aldi and Lidl for shoppers’ weekly spend. Aldi Price Match kept Tesco competitive on everyday items, while Clubcard Prices gave customers a reason to do more of their shop in one place. Those gains showed Tesco could defend its position without relying on higher grocery prices to lift sales.
Higher sales translated into stronger profits. Tesco reported growth in UK sales volumes, while cost savings helped offset pressure from rising operating costs. Adjusted operating profit rose to about £3.1 billion in the year to February 2025, from £2.8 billion a year earlier. For investors, that was evidence that Tesco could sell more and grow profits while continuing to compete on price.
Dividends and buybacks added to the investment case. Tesco raised its full-year dividend from 12.10p to 13.70p per share, a 13% increase. That gave shareholders more cash on top of any share price gains. Buybacks worked differently: by reducing the number of shares outstanding, they helped spread Tesco’s earnings across fewer shares.
How Do Tesco Dividends Affect Its Three-Year Return?
The Tesco share price measures what investors would get for selling their shares. It leaves out the cash they received while holding them. Tesco’s full-year dividend increased from 12.10p for the financial year to February 2024 to 13.70p the following year. For someone holding 1,000 shares and eligible for all payments, that was £121 for the first financial year and £137 for the second, before tax.
Buybacks affect shareholders differently. When Tesco repurchases shares, it can reduce the share count, leaving each remaining share with a larger claim on future earnings. Whether that creates value depends in part on what Tesco pays for the shares and whether it can fund the buybacks while still investing in the business.
How Should Investors Compare Tesco With the FTSE 100?
The fairest comparison uses the same dates and the same type of return. Tesco’s share price change can be compared directly with the FTSE 100 price index. To compare returns with dividends reinvested, the equivalent benchmark is the FTSE 100 Total Return Index.
The distinction matters because Tesco and the wider UK market both pay dividends. Counting Tesco’s dividends but ignoring those paid by other FTSE 100 companies would flatter the supermarket. The comparison also puts a single retailer alongside a diversified index, where banks, energy companies and other large businesses can drive returns for very different reasons.
Tesco Share Price Outlook: What Could Drive the Next Move?
The most useful figures in Tesco’s next results will be UK sales volumes, operating margin and free cash flow. If shoppers buy more while margins hold up, Tesco has room to compete on price without giving back its profit gains. If volumes rise but margins fall, it may be paying more to defend its market share.
Cash flow is where that trade-off becomes visible for shareholders. Tesco still has to pay for stores, distribution and online fulfilment before it can return cash through dividends and buybacks. The strongest case for further gains in the Tesco share price is that the supermarket can keep winning a bigger share of the weekly shop and still have more cash left after paying for it.
Does Tesco’s three-year share price performance include dividends?
A standard share price comparison excludes dividends. Total return includes them and typically assumes they are reinvested.
Where can I check Tesco share price performance 3 years back?
Look up TSCO on the London Stock Exchange or in your broker’s historical price data. Compare the closing price on your chosen end date with the close three years earlier. Use the regular closing price for both dates if you want the share price return before dividends.
Is Tesco a good stock to hold for the next three years?
Tesco’s past performance can tell you how the shares got here. The case for holding them now depends on the price you pay and whether Tesco can keep growing profit while competing with Aldi and Lidl. Look for UK sales volumes and operating margins holding up together, then check whether free cash flow covers the dividend.
Why do different websites show different three-year returns for Tesco shares?
They may use different end dates or compare a live quote with a previous close. Some charts also adjust for dividends. Before comparing two figures, check the dates and whether both measure price return or total return.
The post Tesco Share Price Performance Over 3 Years: Did TSCO Beat the FTSE 100? appeared first in UK on InvestingCube .
