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Sainsbury’s yield hits a tasty 5.4%. Why I still say Tesco is a better buy

The UK’s second largest supermarket J Sainsbury (LSE:SBRY) posted some pretty rubbish numbers in its interim half-year results. However, bosses pumped up dividends by 3% to 6.6p. So is there any value in buying the cheaper Sainsbury’s share price with the yield now at 5.4%? After all, CFO Kevin O’Byrne highlighted “strong retail cash flow generation of £698m“, and Sainsbury’s shares are trading at only 9 times trailing earnings. Sainsbury’s overall sales across the first half of 2019 were down 0.2%, with retail dipping 0.6% and like-for-like sales under water by 1%. The interim dividend of 2.65p is 59% higher than last year’s effort, and City analysts expect an 11.5% hike in earnings per share over the next three years. So while I think Tesco is a better option, would I buy it?

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