As I'm sure some of my stock followers noticed last Friday that the whole grocery and retail sector was on sale last week. There were so many awesome deals on some quality stocks and I couldn't let this sale go by. The retail sector has definitely had their ups and downs this year but there are some solid names out there that will be producing quality dividend growth for years to come.
A few of the names that really strike out at me are Wal-Mart, Kroger and Target. These big names were all in the gutter last week due to the announcement of Amazon buying out Whole Foods Market.
I Already have a sizable position in Wal-Mart and I'm up quite a bit YTD. Kroger was left in the dust and personally it has a 30% upside potential. I decided to pull the trigger on KR seeing as they are a consumer staple and their last reported operating quarter results were pretty fantastic with the only laggard being customer traffic down. Although the yield and aristocratic status aren't really there yet, this stock will serve as a nice vehicle to boost my investment income.
With this latest addition of 81 shares at $21.94 it boosted my annual dividend income by $38.88 bringing me to $1,428.08. I'm super happy with the dividend growth I have achieved already and I look forward to growing it even further! Next stop $2,000!!
I'm sure most people have heard about Kroger but here's a nice description of what they are specifically.
The Kroger Co operates retail food and drug stores, multi-department stores, jewelry stores, and convenience stores throughout the United States. It also manufactures and processes some of the food for sale in its supermarkets.
Kroger is one of the largest retailers in the U.S. As of the end of fiscal 2016, the company operated 2,796 supermarkets, 784 convenience stores, and 319 jewelry stores in 35 states. In addition to its namesake banner, Kroger operates several other chains, including Ralphs, Fred Meyer, King Soopers, Fry's, Harris Teeter, and Food 4 Less. Building out its established footprint, Kroger acquired Roundy's at the end of fiscal 2015, which afforded it a more meaningful foray into the Chicago market.
Current Dividend Yield - 2.15%
Payout Ratio - 21.6%
EPS - $2.22
Dividend Growth - 8 yrs
Dividend Growth rate 5 Year - 16%
Free Cash Flow 560 Million
There are a few very solid reasons I decided to invest in this company over the rest. First off, the upside potential and the bounce play that was created from the whole Foods and Amazon deal was just to good to pass up. Kroger took a 17% lose it's first day and another 12% on the second day. This opened up a major investment opportunity along with a very safe position.
With the entry point I took, I could easily see investment gains into the 50-70% range which would be a major boost for my Independence Fund. I also have a very solid dividend yield of 2.3% which will only help to boost my income.
This is also a no brainier of an investment for me and everyone else that decides to jump on this opportunity. I honestly wish I had more money to throw into this position right now as I really see an amazing outcome opening up. Kroger is not going out of Business, They had a pretty stellar quarter and they are being very price competitive. Although I don't see this position as being a long one, I still see it as a very safe and solid play with very little risk.
We can only wait and see what happens with this one but I'm feeling very confident about it so far!