How Attractive Is Kroger Stock Compared to Its Peers?


Feb. 24 2017, Updated 9:07 a.m. ET

Comparing Kroger’s stock market performance with its peers’

Kroger (KR) stock has done better than its supermarket peers over the last three years. Its share price has risen 75% since the beginning of 2014. 

While the company’s strong performances in 2014 and 2015 lifted its stock price, deflation woes hit it hard in 2016, pulling its price down 17% during the year.

Other supermarkets shared similar woes. Whole Foods Market (WFM), Sprouts Farmers Market (SFM), and SUPERVALU (SVU) fell 8%, 29%, and 31%, respectively, during the year.

2017 has been a mixed year so far. While Kroger and SUPERVALU continue to operate in the red, with falls of 3.7% and 14.8%, respectively, year-to-date (or YTD), Sprouts and Whole Foods have risen 0.4% and 1.1%, respectively, YTD.

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A look at Kroger’s dividend policy

Kroger has paid regular dividends after restoring dividend payments in 2006. In fact, the company has increased its dividends every year since then. Its dividend per share has grown at a CAGR (compound annual growth rate) of 13% over the last ten years.

Over the last four quarters, the company has paid $397 million in dividends. It’s also returned $1.4 billion to its shareholders through share buybacks.

The company has a dividend payout ratio of 21%, indicating that its dividends consume more than 20% of its earnings. In comparison, Whole Foods has a payout ratio of 39%.

Comparing dividend yields

Kroger’s stock offers a lower yield than other dividend-paying food retailers. Its dividend yield is currently hovering around 1.5%. Big box retailers Walmart (WMT) and Target (TGT) offer higher yields of 2.6% and 3.7%, respectively, while Whole Foods’ dividend yield is ~1.8%.

Investors looking to gain diversified exposure to Kroger could choose to invest in the First Trust Consumer Staples AlphaDEX ETF (FXG). KR has a weight of ~2.4% in FXG.


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