1 FTSE 100 retail stock investors should consider right now

Summer season is quick approaching and I’ve been taking stock of my portfolio after an eventful begin to the yr. This yr, the FTSE 100 Index has gained 3.9%, as I write on 6 Could, to sit down at 8,578 factors.

One space I’ve been contemplating shopping for into currently is retail. Discretionary retail shares akin to clothes manufacturers are usually cyclical as their earnings are closely tied to the financial system and client spending.

As a long-term investor, I discover it difficult to get snug with discretionary retail. It’s exhausting to distinguish between an affordable stock prepared for a giant earnings restoration and those who might fade away.

That’s why my focus is on the patron staples sector, together with groceries. These corporations have a tendency to offer important items and are extra insulated from the ups and downs of the financial cycle.

With that in thoughts, J Sainsbury (LSE: SBRY) is one FTSE 100 stock that I feel investors should consider shopping for.

Growing grocery gross sales

Shares within the UK meals retailer have been below stress in 2025. The corporate’s stock worth has fallen 2% to date this yr to £2.70 and have managed to realize simply 0.8% within the final 12 months.

Whereas which may be a warning signal to some, I feel seeing by means of near-term volatility and shopping for secure, profitable corporations is the important thing to long-term investing success.

Sainsbury’s full-year outcomes had been broadly in step with analysts’ expectations. Full-year gross sales had been up 3.1% to £31.6bn with greater grocery volumes offering a lift regardless of weaker Argos gross sales.

Free money circulate declined from £0.6bn to £0.5bn as the corporate’s ongoing cost-cutting train was offset by greater ranges of funding and the timing of funds to clients and suppliers.

Nonetheless, it wasn’t all excellent news for investors. Subsequent yr’s steering displays comparatively muted progress expectations with fierce competitors and inflationary pressures conserving margins low.

Sturdy dividend coverage

I like that the stock provides a wholesome 4.8% dividend yield. That’s nicely above the present Footsie common of round 3.5%. This shareholder-friendly coverage is mirrored in regular dividend payouts of 13.1p in 2024 and 13.6p for the yr ending March 2025.

There’s additionally a particular dividend and new share buyback scheme, which should ship £450m again to shareholders.

Valuation

Sainsbury’s shares are buying and selling at a price-to-earnings (P/E) ratio of 15.3 right now. That’s a contact beneath its main competitor Tesco (16.3), which additionally has a decrease dividend yield of three.6%.

I’m cautious of some relative valuations within the area, nonetheless, with Sainsbury’s non-food section lagging in efficiency barely and muddying the waters by way of an apples-to-apples comparability.

Verdict

All in all, I feel Sainsbury’s is a FTSE 100 retail stock for investors to consider. I feel the corporate is a dependable dividend payer that has a transparent pathway ahead to develop grocery gross sales and enhance free money circulate.

The corporate’s softer steering for subsequent yr does level to some challenges round competitors and progress. Nonetheless, it’s sturdy shareholder returns should assist to melt that blow.

Whereas I don’t have the spare money to speculate right now, it’s one stock that I’ll significantly consider to spice up my portfolio’s dividend yield within the close to future.