Exploring the Sustainability and Growth of The Kroger Co's Dividends
The Kroger Co (KR, Financial) recently announced a dividend of $0.29 per share, payable on 2024-06-01, with the ex-dividend date set for 2024-05-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into The Kroger Co's dividend performance and assess its sustainability.
What Does The Kroger Co Do?
Kroger is one of the largest grocery retailers in the United States with more than 2,700 stores across a portfolio of over 20 supermarket banners. The company touts its ingrained position across US communities, citing that it is a top-two grocer in most of its major market areas. Over one fourth of Kroger's roughly $110 billion in nonperishable and fresh food sales (about 75% of revenue) stems from its private-label portfolio, of which the company manufactures about 30% of units via its 33 food production plants. The firm also operates fuel stations and pharmacies at 60% and 80% of its locations, respectively.
A Glimpse at The Kroger Co's Dividend History
The Kroger Co has maintained a consistent dividend payment record since 2006, with dividends currently distributed on a quarterly basis. The Kroger Co has increased its dividend each year since 2007, earning it the status of a dividend achiever—an honor given to companies that have increased their dividend each year for at least the past 17 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down The Kroger Co's Dividend Yield and Growth
The Kroger Co currently has a 12-month trailing dividend yield of 2.02% and a 12-month forward dividend yield of 2.08%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, The Kroger Co's annual dividend growth rate was 17.40%, decreasing to 15.80% per year over a five-year horizon, and an impressive 13.10% over the past decade. Based on The Kroger Co's dividend yield and five-year growth rate, the 5-year yield on cost of The Kroger Co stock as of today is approximately 4.21%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of 2024-01-31, The Kroger Co's dividend payout ratio is 0.23. The Kroger Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks The Kroger Co's profitability 8 out of 10 as of 2024-01-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. The Kroger Co's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and The Kroger Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The Kroger Co's revenue has increased by approximately 6.80% per year on average, a rate that outperforms approximately 56.95% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, The Kroger Co's earnings increased by approximately 11.10% per year on average, a rate that outperforms approximately 53.14% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 19.00%, which outperforms approximately 69.23% of global competitors.
Conclusion
The analysis of The Kroger Co's dividend payments, growth rates, payout ratio, profitability, and growth metrics presents a promising outlook for current and prospective investors. The consistent increase in dividends, coupled with robust financial health and growth prospects, underscores the potential for sustainable returns. Investors seeking to diversify their portfolios with stable dividend-yielding stocks should consider The Kroger Co as a viable option. GuruFocus Premium users can further explore high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
