Dividend Increase Announcement
On June 27th, Kroger announced a dividend increase of 14.3%. This will increase their dividend per quarter from $0.14 to $0.16. It is payable on September 1st for shareholders of record on August 15th. The new quarterly dividend represents an annualized dividend amount of $0.64 per share as compared to the current annualized dividend amount of $0.56 per share.
Target Dividend Information
Annual Dividend: $0.64
Over the past year Kroger has been struggling to grow it’s share price. With Amazon purchasing Trader Joe’s a lot of investors have been very leery of buying stock in a grocer like Kroger.
Kroger is currently operating with $15.2B in debt and lease obligations
The company has grown their digital sales by 42% which will help supplement their flat identical sales year over year.
Dividend Yield: 2.99%
Dividend Growth History: 10 years
Payout Ratio: 30.2%
Dividend Increase Effect On More Dividends
I am currently holding 18 shares of Kroger. Unfortunately these shares are sitting in a RobinHood account so I am not able to DRIP the dividends but I do save them up and continue to reinvest them. With this 14.3% increase, it will add $1.44 to my Projected Annual Dividend Income.
As we all know, Kroger operates in a very low margin industry. Despite this Kroger is positioned as a leader in their industry. A very strong argument could be made that Kroger is a risky value play here. They are carrying a lot of debt but in due time their transformation strategy should start showing some very positive results. The big questions of course is will it succeed and when.
For the time being, I am going to just hold my position as it is. If the share price continues to depreciate I would definitely consider buying more so that I could lower my cost basis.
Regardless of how large or small, I love all dividend increases. That is how we end up with More Dividends 😉
Do you currently hold any stock in Kroger? What do you think of this dividend increase? Just let me know in the comments.
As always I look forward to reading all of your comments and questions, until then….. happy investing!
-Jason from MoreDividends.com
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