Sainsburys: Dividend covered two times by underlying earnings Greggs: Progressive dividend which is covered two times by diluted earnings per share before exceptional items McColl’s: Dividend based on a 50% pay-out ratio to profit after tax (before adjusting gains but after adjusting losses) Payout Policy Takeaways: Greggs is the only company that provides a future outlook for its dividends (progressive) Sainsbury’s determine their dividend on adjusted earnings Can be instable (Arnold, 2012) Subject to earnings management Can have a negative effect on the company (see Sainsburys) Every company paid an interim and final dividend over the last three years No other pay-out related transactions (e.g. share repurchases) Dividend Analysis Sainsbury’s profit after tax decreased constantly; dividend per share remained mostly constant/ slightly increased Attempt to keep the shareholders satisfied or rather pay them for their loyalty Greggs’ and McColl’s dividend per share are in line with the profit after tax Profit after tax (£m) FY16/17 Sainsbury Greggs McColls 377 62.255000000000003 13.92 FY17/18 Sainsbury Greggs McColls 309 64.843999999999994 14.19 FY18/19 Sainsbury Greggs McColls 219 71.63 6.85 Dividend per share (in GBp) FY16/17 Sainsbury Greggs McColls 10.199999999999999 31 10.199999999999999 FY17/18 Sainsbury Greggs McColls 10.199999999999999 32.299999999999997 10.3 FY18/19 Sainsbury Greggs McColls 11 35.700000000000003 4 Dividend Analysis Greggs dividend payout ratio was constant over the three years McColl’s ratio was constant for the first two years, but decreased for FY18/19 Sainsbury’s: Dividend payout ratio has more than doubled to 121% in FY18/19 Partially used retained earnings to pay dividends Consequence of underlying earnings as basis May hamper future investments Dividend per shareFY16/17FY17/18FY18/19AverageSainsbury’s10,2010,2011,0010,47Greggs31,0032,3035,7033,00McColl’s10,2010,304,008,17EPSFY16/17FY17/18FY18/19AverageSainsbury’s17,5013,309,1013,30Greggs57,8056,6065,2059,87McColl’s12,8012,325,9510,36 Dividend Payout Ratio Sainsbury FY16/17 FY17/18 FY18/19 0.58285714285714285 0.76691729323308266 1.2087912087912089 Greggs FY16/17 FY17/18 FY18/19 0.53633217993079585 0.57067137809187274 0.54754601226993871 McColls FY16/17 FY17/18 FY18/19 0.79687499999999989 0.83603896103896103 0.67226890756302515 Dividend Yield Greggs dividend yield ratio was constant over the three years Provides the lowest ratio Provides the most constant dividend yield McColl’s dividend yield ratio declined for the periods under consideration McColl’s annual cash return is on a good (average) level with a negative tendency during the periods under consideration Sainsbury’s dividend yield ratio constantly increased Sainsbury provides the highest (average) cash returnDividend yield ratioFY16/17FY17/18FY18/19AverageSainsbury’s3,83%4,20%4,92%4,32%Greggs3,20%2,33%2,83%2,79%McColl’s5,75%3,63%3,17%.

1. Sainsburys:
Dividend covered two times by underlying earnings
Greggs:
Progressive dividend which is covered two times by diluted
earnings per share before exceptional items
McColl’s:
Dividend based on a 50% pay-out ratio to profit after tax
(before adjusting gains but after adjusting losses)
Payout Policy
Takeaways:
Greggs is the only company that provides a future outlook for
its dividends (progressive)
Sainsbury’s determine their dividend on adjusted earnings
Can be instable (Arnold, 2012)
Subject to earnings management
Can have a negative effect on the company (see Sainsburys)
Every company paid an interim and final dividend over the last
three years
No other pay-out related transactions (e.g. share repurchases)
Dividend Analysis
Sainsbury’s profit after tax decreased constantly; dividend per
share remained mostly constant/ slightly increased
Attempt to keep the shareholders satisfied or rather pay them
for their loyalty

2. Greggs’ and McColl’s dividend per share are in line with the
profit after tax
Profit after tax (£m)
FY16/17
Sainsbury Greggs McColls 377 62.255000000000003
13.92 FY17/18
Sainsbury Greggs McColls 309 64.843999999999994
14.19 FY18/19
Sainsbury Greggs McColls 219 71.63 6.85
Dividend per share (in GBp)
FY16/17
Sainsbury Greggs McColls 10.199999999999999 31
10.199999999999999 FY17/18
Sainsbury Greggs McColls 10.199999999999999
32.299999999999997 10.3 FY18/19
Sainsbury Greggs McColls 11 35.700000000000003
4
Dividend Analysis

3. Greggs dividend payout ratio was constant over the three years
McColl’s ratio was constant for the first two years, but
decreased for FY18/19
Sainsbury’s:
Dividend payout ratio has more than doubled to 121% in
FY18/19
Partially used retained earnings to pay dividends
Consequence of underlying earnings as basis
May hamper future investments
Dividend per
shareFY16/17FY17/18FY18/19AverageSainsbury’s10,2010,201
1,0010,47Greggs31,0032,3035,7033,00McColl’s10,2010,304,00
8,17EPSFY16/17FY17/18FY18/19AverageSainsbury’s17,5013,3
09,1013,30Greggs57,8056,6065,2059,87McColl’s12,8012,325,9
510,36
Dividend Payout Ratio
Sainsbury FY16/17 FY17/18 FY18/19
0.58285714285714285 0.76691729323308266
1.2087912087912089 Greggs FY16/17 FY17/18
FY18/19 0.53633217993079585 0.57067137809187274
0.54754601226993871 McColls FY16/17 FY17/18
FY18/19 0.79687499999999989 0.83603896103896103
0.67226890756302515
Dividend Yield
Greggs dividend yield ratio was constant over the three years
Provides the lowest ratio
Provides the most constant dividend yield
McColl’s dividend yield ratio declined for the periods under

4. consideration
McColl’s annual cash return is on a good (average) level with a
negative tendency during the periods under consideration
Sainsbury’s dividend yield ratio constantly increased
Sainsbury provides the highest (average) cash returnDividend
yield
ratioFY16/17FY17/18FY18/19AverageSainsbury’s3,83%4,20%4
,92%4,32%Greggs3,20%2,33%2,83%2,79%McColl’s5,75%3,63
%3,17%4,18%
Dividend yield ratio
Sainsbury’s FY16/17 FY17/18 FY18/19
3.8300000000000001E-2 4.2000000000000003E-2
4.9200000000000001E-2 Greggs FY16/17 FY17/18
FY18/19 3.2000000000000001E-2
2.3300000000000001E-2 2.8299999999999999E-2
McColl’s FY16/17 FY17/18 FY18/1 9
5.7500000000000002E-2 3.6299999999999999E-2
3.1699999999999999E-2
RecommendationsINVESTOR RISK
LEVELRECOMMENDATIONRisk AverseRisk NeutralRisk
Seeking
Greggs:
Constant level of dividend
Progressive dividend policy
Highest dividend per share

5. McColl’s:
Mostly constant dividend with a dip in FY18/19 in line with
EPS / Profit after tax
Sainsbury’s:
High level of dividend pay-out ratio
Decreasing EPS / Profit after tax
140 BUSINESS & FINANCE ICONS
140 BUSINESS & FINANCE ICONS