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Kroger Approves New $500 Million Repurchase Plan

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Dividend and share buyback announcement

Cincinnati-based Kroger (KR) announced a dividend of $0.12 per share on March 9, 2017—in-line with the previous quarter. The dividend will be paid on June 1, 2017, to shareholders of record at the close of business on May 15. The company noted that it increased its dividends at a double-digit compounded growth rate since 2016.

Kroger also announced a new $500 million buyback program to supplement the ongoing authorization plan. As of March 8, 2017, Kroger has ~$120 million remaining under its current authorization.

While talking about the company’s repurchase program, Rodney McMullen, Kroger’s chairman and CEO commented, “Kroger’s share repurchase authorization reflects our Board of Directors’ confidence in our long-term strategy and our ability to generate value for shareholders.”

He also said, “We remain committed to delivering value to shareholders. Over the last four quarters, the company has returned more than $2.2 billion to shareholders through share buybacks and dividends combined.”

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Kroger’s stock market performance and dividend yield

Currently, Kroger stock is trading at $28.83—36% below its 52-week high price. The company has lost 16.5% to date. Competitors SuperValu (SVU), Whole Foods Market (WFM), and Sprouts Farmers Market (SFM) are also in the red—down 28%, 4.8%, and 6%, respectively.

Kroger stock offers a dividend yield of 1.7%—lower than most retailers that pay dividends. Big box retailers Walmart (WMT) and Target (TGT) offer higher yields of 2.7% and 4.5%, while Whole Foods’ dividend yield is ~2%.

Investors looking to invest in Kroger through ETFs can choose to invest in the First Trust Consumer Staples AlphaDEX Fund (FXG). Kroger accounts for ~2.4% of FXG.

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