I think the Tesco (LSE: TSCO) share price could be one of the best assets to own for long-term investors. The company’s defensive nature also indicates it may be one of the best stocks to own to protect one’s wealth in the stock market crash.
What’s more, as one of the largest retailers in the UK, Tesco has some unique competitive advantages. These should help the business stay ahead of its peers in the current uncertain operating environment.
Stock market crash protection
As the second wave of coronavirus builds, I’ve been looking for companies that performed well the first time around. Supermarkets did exceptionally well, thanks to a surge in demand for food and essential products. As a result, the Tesco share price proved to be a safe haven in March’s stock market crash.
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Based on this performance, I think investors could benefit from buying the stock in the second wave. In its latest trading update, Tesco revealed that food and drink sales jumped in the first half of 2020. Although reduced fuel sales did drag on overall results, the food division’s enhanced operating performance largely offset this downturn.
And thanks to this performance, the company has been able to stick by its dividend commitments for the year. Even though management has attracted some criticism for paying a dividend in the crisis, Tesco’s commitment to the payout and its investors is a testament to its diversified and defensive business model, in my opinion.
At the time of wiring, the Tesco share price offers a dividend yield of 3.8%. Analysts reckon this figure could hit 4.3% next year.
Time to buy the Tesco share price?
However, despite all of the company’s attractive qualities, the stock has been falling this year. It’s now trading down around 25% since the beginning of the year. Further, after recent declines, shares in the retailer are trading below the lows of March’s stock market crash.
This doesn’t seem to make much sense. We know Tesco’s sales remained strong in the last coronavirus lockdown, and it seems likely the same will happen the second time around. That implies investors are far too pessimistic about the firm’s outlook.
I reckon this could be a buying opportunity for long-term investors. As the country’s largest retailer, Tesco has tremendous competitive advantages over the rest of the market. It’s unlikely these will disappear any time soon.
The company also owns wholesaler Booker, which supplies thousands of smaller retailers around the country. Once again, this is a strong competitive advantage that would be very difficult to replicate.
Therefore, I think now could be the time to take advantage of the recent Tesco share price weakness and buy a share of this business for the long term. Consumers will always need food and drink, and this supermarket giant’s countrywide network can supply these products daily, with some stores back to 24/7 hours.
