Tesco has restored dividend payments for the first time since its 2014 accounting scandal, as sales continued to pick up despite inflationary pressures.
The retailer said like-for-like sales in the UK and Ireland rose 2.2% compared to a year earlier in the 13 weeks to 26 August – the seventh straight quarter in which sales have grown.
Pre-tax profits came in at £562m ($746m) for the first half of the financial year, up from £71m in the same period of 2016, while group revenues rose 1.4% to £28.3bn.
Tesco announced that it would pay out an interim dividend of 1p per share, reflecting "improved performance and board confidence".
Britain's largest retailer had halted dividend payments in the 2014/15 financial year, just before it revealed that it had overstated its half-year profit guidance by £263m.
Tesco shares opened 1.5% higher on the news in London.
"We are continuing to make strong progress," Tesco chief executive Dave Lewis said. "Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago.
"Today's announcement that we are resuming our dividend reflects our confidence that we can build on our strong performance to date."
Tesco said sales growth in UK was driven by strong demand for its fresh food brands, which featured in over 70% of customer baskets.
"Market conditions have been challenging with inflationary pressure being felt throughout the half but we have worked hard with our supplier partners to minimise price increases for customers," the retailer said.
Tesco agreed to pay a fine of £129m to the Serious Fraud Office earlier this year to avoid prosecution for its 2014 accounting irregularities scandal.
The supermarket chain struck a £3.7bn deal to buy food wholesaler Booker in January, which is currently being probed by the Competition and Markets Authority.