Supermarket Operator Gives Shareholders Growth, Income

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Supermarket operators are not known for growth, butKroger ( KR ) is expanding its top and bottom lines.

The nation's largest supermarket chain, which runs Ralphs, Food 4 Less, Fred Meyer and others, recently delivered its fifth straight quarter of double-digit profit growth.

Last week, Kroger reported earnings of 92 cents a share for its fiscal Q1 ended May 25. That marked an 18% increase from a year ago and topped analysts' expectations by 4 cents.

Kroger's sales rose 3% to a little over $30 billion, but that was slightly below views.

Still, the company raised its full-year profit outlook to a range of $2.73 to $2.80 a share. Previously, the firm expected $2.71 to $2.79 a share.

Loyalty programs, price cuts, fast lines and a knowledgable staff have helped bring in customers at a time of tough competition. Shoppers can buy meat, veggies and toilet paper at traditional supermarkets. And nowadays, they can also get these same items atWal-Mart ( WMT ),Target ( TGT ) or even dollar stores.

On Thursday, Kroger's board declared a quarterly dividend of 15 cents a share. The dividend will be paid Sept. 1 to shareholders of record Aug. 15.

The company pays 60 cents a share on an annual basis. At current prices, Kroger has a yield of about 1.7%. This is one of the lower yields among the 15 dividend-paying stocks in the Retail-Super/Mini Markets group.

Kroger went on a tear after breaking out past a 27.11 buy point from a flat base. The stock bolted 31% by May before pulling back to its 10-week moving average.

Last week, Kroger suffered a big downside reversal, as the market slumped into a correction. But the stock is staging a comeback this week.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: KR , TGT , WMT

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