Kroger Approves New Repurchase Plan, Increases Dividend



Dividend Announcement

On June 23, the Cincinnati-based Kroger (KR) announced a dividend of 12 cents per share, raising its quarterly dividend payments by 14%. The dividend will be paid on September 1, 2016, to shareholders of record on the close of business on August 15, 2016.

While talking about the dividend increase, Rodney McMullen, Kroger’s Chairman and CEO, commented, “We remain committed to delivering value to shareholders. Kroger has delivered double-digit compound growth in its dividend since we reinstated it in 2006.” He added, “Our strong cash flow has enabled us to return to shareholders more than $2.7 billion in dividends since 2006.”

Article continues below advertisement

Share buyback announcement

Kroger also announced a new $500 million buyback program to replace the previous authorization plan, which has already been exhausted. The company noted that it has spent $12.9 billion on share repurchases since 2000, effectively buying back half the stock float during this period.

About Kroger

Founded in 1883, The Kroger Co. (KR) is the largest US supermarket operator and one of the world’s largest grocery retailers, surpassed only by Walmart (WMT) in grocery sales. The company operates more than 2,700 supermarket stores, 784 convenience stores, and 323 fine jewelry stores in 34 US states (as of January 31, 2016).

Walmart (WMT) is Kroger’s biggest competitor. It operates more than 4,400 stores in the United States alone. Kroger’s other competitors are smaller in size. Whole Foods Market (WFM) operates around 430 stores while Sprouts Farmers Market (SFM) operates 217 stores.

The company has enhanced its investors’ returns through continuous dividend payments and share buybacks. Over the last year, the company has used its free cash flow to repurchase $1.1 billion in common shares and pay $397 million in dividends.

Kroger is a component of the S&P 500 Index and S&P 500 Food & Staples Retail Index. It constitutes 2.5% of the Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS) and 2.1% of the SPDR Consumer Staples Select Sector ETF (XLP).


More From Market Realist