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Sainsbury’s and Morrisons continue to battle in the UK supermarket price war | Investomania

The first and most obvious reason is that investors, especially long-term buy-and-hold investors, may receive less income for holding Sainsbury’s shares. For many investors, the reason they hold shares is for gradual capital growth and a dividend that could exceed the income return they are able to achieve from a bank account. As far as I can see, a falling dividend is akin to a pay cut for investors.

The second reason is negative sentiment surrounding Sainsbury’s shares, which could cause its share price to drop. Imperial Brands PLC (LON:IMB) (IMB.L) announced recently that it would raise its dividend by 10%. That should hopefully cause improving sentiment in the long run, although I must point out that since the announcement the Imperial Brands share price has fallen back.

However, the Sainsbury’s share price declined when it announced its dividend cut. On 3 May, the day its results were released, the Sainsbury’s share price fell from about 280p to less than 265p. In my view, at least some of this was due to the dividend cut.

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Sainsbury’s and Morrisons continue to battle in the UK supermarket price war – Investomania.