The Kroger Co (NYSE:KR) has gotten lots of attention lately as investors learned last week that Warren Buffett's Berkshire Hathaway Inc (NYSE:BRK-A)(NYSE:BRK-B) has purchased 18.9 million shares of the company, for about a 2.4% holding of Kroger.
Shares of Kroger were up in after-hours trading on Friday as many investors are often eager to follow in the billionaire investor's footsteps.
Kroger hasn't been the best investment over the years with its share price falling more than 22% in five years. However, with a price-to-earnings multiple of 14 and trading at around 2.5 times book value, the stock is well-priced and would fit the criteria for a value investor like Buffett.
In fiscal 2019, Kroger didn't generate any growth but it's still been a profitable company and one that can be a solid long-term investment, especially for investors who are looking for a good dividend.
While its yield of 2.2% may not be the highest that investors can find and only modestly above the S&P 500 average yield of 2%, it's still a good opportunity to secure a low-risk dividend. Kroger stock has averaged a beta of around 0.7 and it's ideal for investors who don’t' want to see wild swings.
Kroger is expected to release its quarterly earnings in early March and news of the investment could make it a popular buy leading up until then. However, investors should always do their own analysis to determine if a stock is a good fit for their investment goals, rather than investing in it because a big investor did. And unless you're in it for the dividend, there isn't a whole lot of reason to buy Kroger shares today.
