The Kroger Company
), one of the largest grocery retailers, revealed its plan to
utilize its free cash to boost stakeholders' return by announcing
a dividend hike.
The Cincinnati, Ohio based company, raised its quarterly
dividend by 10% to 16.5 cents (or 66 cents annually) from 15
cents a share (or 60 cents annually). The increased dividend will
be paid on Dec 1, 2013, to shareholders of record as of Nov 15,
The company's commitment toward increasing shareholders'
return reflects its free cash flow generating capability, sound
liquidity position and defined future prospects.
However, the news did not provide much impetus to the stock,
as the share price of this Zacks Rank #3 (Hold) company rose 1.1%
or 43 cents to close at $40.99 on Thursday. The dividend yield
based on the new payout and the last closing market price is
This is the seventh consecutive annual increase in Kroger's
quarterly dividend since it reinstated dividend payment in 2006
at the rate of 6.5 cents per share. Since then, Kroger has
returned over $8.3 billion to stakeholders via dividends and
Kroger, an S&P 500 company, last hiked its quarterly
dividend to 15 cents from 11.5 cents in Sep 2012, reflecting an
increase of approximately 30%.
The news of the dividend hike came over a week after the
company posted impressive second-quarter fiscal 2013 results,
wherein earnings of 60 cents a share surged from 51 cents earned
in the prior-year quarter, buoyed by the Customer 1
Other companies, which recently increased quarterly dividend,
) by 5% to 81 cents,
) by 22% to 28 cents, and
) by 20% to 15 cents.
Dividend hikes not only enhance shareholder's return but raise
the market value of the stock. Through this strategy, the
companies bolster investors' confidence on the stock, thereby
persuading them to either buy or hold the scrip instead of
selling them. Looking ahead, the company remains confident of its
growth potential, suggesting enhanced value for shareholders.
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