Published on 31st August 2014
Sell shares of Sainsbury's because the supermarket group's dividend is under threat, Questor said in the Sunday Telegraph. The UK supermarket sector is heading for lower profits and that means Sainsbury's payout is on the chopping block after Tesco's shock slashing of its interim dividend by 75%. Sainsbury's shares may look like good value but the prospective dividend yield of 5.4% is a value trap. Sainsbury's finance chief John Rogers says the balance sheet is strong but Questor is concerned that the payout is funded by debt. Without more guidance from the company's new management, holding cash is a better option.