Kroger Rewards Shareholders With 9% Increase in Quarterly Dividend

The Kroger Co. KR has announced an increase in the quarterly cash dividend, which underscores its confidence in the long-term prospects and reaffirms the focus on delivering stable and growing returns to investors. The company has approved a 9% increase in its quarterly dividend. 

With this decision, the annual dividend will rise from $1.28 to $1.40 per share. The next quarterly dividend of 35 cents per share will be paid on Sept. 1, 2025, to its shareholders of record as of the close of business on Aug. 15.

This marks the 19th consecutive year that the company has raised the dividend since reinstating it in 2006. Over this period, the dividend has increased at a compounded annual growth rate of 13%. The company reaffirmed its commitment to continue increasing dividends over time, subject to approval by board of directors.

Commenting on this development, Ron Sargent, chairman and CEO, stated that the dividend increase reflects the board’s strong confidence in Kroger’s consistent operating performance and robust free cash flow generation. The company expects an adjusted free cash flow between $2.8 billion and $3 billion for fiscal 2025.

Kroger reiterated its capital allocation strategy, which focuses on using free cash flow to invest in the business for sustainable long-term earnings growth. Additionally, the company remains committed to maintaining its investment-grade debt rating while continuing to return capital to shareholders. Kroger affirmed that it will continue balancing these priorities to drive long-term growth and shareholder value.

How KR’s Dividend Strategy Compares With COST, LOW and TGT

While Kroger continues its 19-year streak of dividend growth, Costco Wholesale Corporation COST recently raised the quarterly dividend by a notable 12% from $1.16 to $1.30 per share. This increase highlights Costco’s strong cash flow and disciplined financial management. Costco has consistently appealed to investors seeking income backed by robust fundamentals and market resilience.

Lowe’s Companies, Inc. LOW reaffirmed its shareholder commitment with a 4% dividend hike, bringing the quarterly payout to $1.20. With more than 25 consecutive years of dividend increases, Lowe’s demonstrates reliability and steady capital return. Lowe’s has paid dividends every quarter since 1961, underlining its long-term dedication to income investors.

Target Corporation TGT has also announced a 1.8% increase in its quarterly dividend to $1.14 per share, marking the 54th consecutive year of dividend growth. This also represents the 232nd straight dividend payment since October 1967, implying Target’s strong commitment to consistent shareholder returns. Target’s first-quarter fiscal 2025 dividend payout totaled $510 million, slightly up from $508 million a year ago.

KR’s Price Performance, Valuation and Estimates

Kroger stock has gained 6.8% over the past three months against the industry’s growth of 13.8%. 

Kroger’s forward 12-month price-to-sales ratio of 0.31X indicates a lower valuation compared with the industry’s average of 1.06X. KR carries a Value Score of A.

The Zacks Consensus Estimate for Kroger’s current financial-year sales and earnings per share implies year-over-year growth of 1.1% and 6.5%, respectively. 

Kroger currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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