Greggs (LSE:GRG) shares are down 37% since the start of the year. But lower share prices can often mean better returns for investors over the long term.
In the case of the FTSE 250 food retailer, the dividend yield is 3.86%. Going forward, however, analysts are wary about how sustainable that return is.
Dividend yields
A year ago, £10,000 would have bought 360 Greggs shares. And with the company distributing 69p per share in dividends, this equates to £248 in passive income.
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At today’s prices, however, the equation looks very different. Analysts are expecting the dividend to drop to 68p per share, meaning a 360-share investment is set to generate £244.
That’s not good for anyone who bought the stock a year ago. But the share price today is 36% lower than it was a year ago, which more than offsets the anticipated fall in the dividend.
As a result, a £10,000 investment in Greggs today would buy 556 shares – enough to generate £384 in passive income. And the forecast is better for 2026.
| Year | Dividend per share | Growth % | Yield (£17.91 share price) |
|---|---|---|---|
| 2024 | 69p | – | 3.85% |
| 2025 | 68p | -1.44% | 3.80% |
| 2026 | 70.7p | 3.97% | 3.95% |
Analysts are expecting the challenges of this year to be short-term in nature. As a result, the expectation is for the dividend to reach 70.7p – above its 2024 levels – in 2026.
That would imply a 3.93% dividend yield based on today’s prices (enough to make a £10,000 investment generate £393 in passive income). That’s not bad, but how likely is it?
Outlook
I think investors have good reason to expect growth over the next couple of years. I thought the most recent earnings report was quite bad, but I don’t see this as a problem in the short term.
The challenge Greggs has been facing recently has been weak like-for-like sales growth. This has fallen from 13.7% in 2023, to 5.5% in 2024, and now to 1.7% in the first nine weeks of 2025.
That’s quite the decline. And while some of it can be put down to difficult trading conditions, it suggests Greggs might not be as resilient in a weak economy as some investors might hope.
Nonetheless, in the short term, I think investors have reason to be positive. While like-for-like sales might be weak, I expect this to be offset by the company opening more stores.
This isn’t sustainable over the long term. But it happened in 2025 and I expect something similar in 2026 as Greggs continues to make progress towards its target of 3,000 outlets.
As a result, the forecast of 70.7p per share in 2026 looks plausible. And a 3.85% dividend yield at a time when 10-year UK government bonds yield 4.75% implies expectations of growth.
Long-term investing
From an income perspective, I think Greggs shares look good over the next couple of years. But with my own investing, I aim to look past this to the longer term.
Eventually, Greggs will reach its final capacity in terms of stores. From then, growth will have to come from higher like-for-like sales, so the weakness in this metric is a genuine concern.
In my view, the question is whether the share price is cheap enough to be a good investment despite this. I’m undecided, and there are other opportunities that stand out to me more, so I’ll not be buying now.
