Have you ever been in a Tesco (LSE: TSCO) shopping aisle, wondering about how much money the supermarket makes and whether it could make sense to buy its shares? After all, the chain is the country’s largest grocer by far and many shareholders already earn passive income thanks to its dividends.

To illustrate, say someone had put £15k into Tesco shares at the start of the year. What sort of passive income would they now be earning?

One dividend, many dividend yields!

An obvious starting place to answer that question is by looking at Tesco’s dividend yield. Currently, it sits at 3.1%.

That is exactly in line with the FTSE 100 yield right now, incidentally. So an investor could likely earn the same yield by investing in a FTSE 100 tracker fund that pays dividends.

But a dividend yield is a function of two things. One is the dividend per share – this is the same for all shares of a certain class.

The second is the price paid. That will be different depending on what the shareholder paid for their shares. Indeed, the same shareholder can earn different yields on one company’s shares if they bought the shares on multiple occasions, at different prices.

What’s been going on with the Tesco share price in 2026?

Since the start of the year, the Tesco share price has moved up 8%.

So, someone who bought back then would be earning a higher yield than 3.1% — around 3.3%. On a £15k investment, that would mean roughly £495 of passive income annually.

It could certainly take some of the sting out of paying for your weekly shop at Tesco knowing that each week you were earning the equivalent of almost a tenner in passive income from the chain!

Where might things go from here?

That, though, is a yield based on historical figures. Past performance is no guarantee of what may happen next, as Tesco shareholders found out in 2015 when it cancelled the payout.

Shareholders would not receive any more passive income from their Tesco stake until the dividend was reinstated a couple of years later.

The most recent increase in Tesco’s annual dividend came in at around 6%, which I regard as attractive.

With its market-leading position, extensive shop estate, large loyalty scheme and proven business model, I think Tesco may keep growing its dividend in years to come.

There are risks, though. Weak consumer sentiment could eat into household budgets. Even though some groceries are essential, tighter spending could expose Tesco to more competition from price-led rivals.

I could take or leave the Tesco dividend.

It strikes me as fine – passive income is always welcome, after all – but as I said above, I could target a similar yield simply by buying a FTSE 100 tracker.

That would reduce my exposure to Tesco-specific risks versus buying the share directly. But if Tesco does well, it would also mean I may miss out on some of the benefits.

With the Tesco share price currently 18 times earnings, I do not think it is attractively priced.

Instead, I am more interested in finding better value blue-chip shares with higher yields.

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Christopher Ruane does not hold any positions in the companies mentioned.