Kroger (NYSE:KR), one of the leading supermarket chains in the United States, makes for a stable long-term investment. As a bonus, it also pays a high-yielding dividend. And last week, the company announced it was increasing it by 11.5%, to 29 cents. With the dividend increase, Kroger's dividend yield has climbed to 2.5%, which is above the S&P 500 average of 1.6%.
The decision reflects the company's strong financial position, fueled by consistent and robust free cash flow generation. CEO Rodney McMullen stated that, "Our business continues to generate strong and consistent free cash flow and has proven to be resilient in a variety of operating environments."
Over the trailing 12 months, the company has generated $1.4 billion in free cash flow. That's roughly double what it pays out in dividends on an annual basis, suggesting that there could be room for more increases in the future. Last quarter, Kroger's sales totaled $45.2 billion, which was up modestly from the $44.6 billion it reported in the prior-year period. While that's not huge growth, it's still a positive sign and demonstrates Kroger's overall resiliency to inflation and worsening economic conditions.
Despite facing challenges within the retail industry, Kroger has made for a good buy this year with its stock rising 5% year to date. It's also still a cheap buy with the stock trading at a price-to-earnings multiple of 13. Whether you're investing for the long term or just want a stock you can safely hold this year, Kroger makes for an excellent option.
