The Kroger Co. KR announced a 2 for 1 stock split yesterday at its annual shareholder meeting. The split is scheduled on or about Jul 13, 2015 for shareholders as of Jul 6.
In addition, the company announced a $500 million worth of share repurchase authorization and hiked quarterly dividend by 13.5% to 21 cents per share on a pre-split basis. Following the split, for each share the holder will be entitled to a dividend of 10.5 cents, payable on Sep 1, 2015 to shareholders as of Aug 14, 2015. The company is unlikely to buyback any shares until the next fiscal year.
The Wall Street Journal observed that stock splits are becoming common practice these days after losing its sheen in 2000 given the “bubble burst”. So far in the year, nine companies on the S&P 500 index, including Visa, Inc. V, Netflix, Inc. NFLX and Ross Stores Inc. ROST, have announced stock splits.
Stock splits enable the companies to attract retail investors. As share prices rise, it becomes difficult for these small investors to buy shares. Stock split leads to a reduction in price and hence, makes it affordable.
This is the fifth time Kroger has annouced a stock split in its history. The last one was in 1999.
Kroger is one of the largest grocery store and supermarket retailers in the country. With close to half a million employees and over 2,600 stores, the company has a strong foothold throughout the United States. While most notable for the Kroger branded stores, the stores operate under 12 different local banners. The company also owns convenience stores, jewelry stores, gas stations, and food processing plants.
At present, Kroger carries a Zacks Rank #3 (Hold).
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