The Tesco (LSE: TSCO) share price has blown the FTSE 100’s performance out of the water in recent months. Stock in Britain’s biggest grocery retailer is up 9.3% in the last month alone. For comparison, the Footsie is down 0.1% during the same period.

That now means Tesco shares have climbed 27.3% year to date. They’re up 37.5% over the last 12 months. Zooming out even further, they’ve returned an impressive 22.1% over the last five years.

I don’t hold Tesco for my portfolio. However, it’s a stock I’m keen on. If I had the investable cash, I’d add it to my holdings today. Here’s why.

The top dog

The main reason I like Tesco is because of its dominant market share. It has a 27.7% grip over the market, making it the frontrunner by some distance. In second place is Sainsbury’s with a 15.3% share.

That gives it a big edge over its competition. Tesco has incredibly strong brand recognition. It comes with other benefits too, such as economies of scale.

Passive income

Then there’s the passive income on offer. Tesco yields a healthy 3.2%. That’s below the FTSE 100 average. However, I see potential for further growth in the future.

Last year its payout climbed 11% to 12.1p per share. Alongside that, it completed £750m worth of share buybacks.

In its most recent commitment, the business has announced it plans to buy back up to £1bn worth of shares by April 2025.

Since launching its capital return programme back in October 2021, Tesco has bought back nearly £2bn worth of shares.

Rising threats

While I’m bullish on the business given its dominant position in the grocery retail industry, the rise of competition is most certainly something to keep an eye on. That comes largely in the form of budget retailers such as Aldi and Lidl. In recent years, they’ve continued to grow in popularity.

The cost-of-living crisis has aided that. As consumers have felt the pinch on their wallets, naturally they’ve been forced around to shop for the best deals.

Aldi’s market share surpassing 10% for the first time recently is proof of just how far the German outfit has come. In the years ahead, Tesco will have to navigate the challenge of more consumers considering switching.

Coping just fine

But so far, I’ve been largely impressed with how Tesco has dealt with the threat. It has introduced measures such as Aldi price match to retain customers.

On top of that, it has its Clubcard loyalty programme, which has been a key pillar to its success in recent times. Nearly 22m people now have a Clubcard while its app has also seen solid growth in the total number of users.

Tesco cited its Clubcard strategy as a major driver behind the 159% jump in pre-tax profits it posted last year.

I like what I see

With that considered, even despite its rise I think Tesco could be a smart addition to my portfolio today.

The stock looks like good value for money, trading on 15.2 times earnings. That’s above the FTSE 100 average of 11 but I’m content with paying a premium for quality businesses. And in my opinion, Tesco is just that.