Quality income plus how to understand a major bank

This week we look at how Tesco’s more focused strategy supports the case for it as a quality income share. We also discuss whether JP Morgan, the US’s most valuable bank, is worth it as a long-term leveraged play on the global economy.

The past decade has been tough for Tesco (TSCO) and its shareholders. The company has gone from sweeping away all before it in the UK while attempting to build a global supermarket empire, to a business that has much more modest ambitions.

Its shares have woefully lagged the UK stock market over that time, but the past couple of years have seen a return to happier times. Tesco can no longer be seen to be a growth stock, but it looks as though it has the potential to be a good investment for income investors.

Meanwhile, JP Morgan Chase (US:JPM) shareholders look well-positioned against changes for the banking industry. It is expected to keep on building its equity buffer as dividends paid and share buybacks are less than the company’s expected net profits.

There are new competitive threats on the horizon and reasons to expect growth in net interest income won't continue at the recent pace. Yet there are also still some grounds for cautious optimism.