Grocery store operator Kroger (NYSE:KR) reported earnings last week and despite strong results, shares tumbled more than 7% during the day.
Sales of $31.7 billion were up a modest 3.9% year over year but that was good enough to beat analyst expectations, which averaged $30.68 billion for the period. Its operating profit of $839 million was also a 2.3% improvement from last year. The company also raised its guidance for 2021, projecting its adjusted diluted earnings per share to fall within a range of $3.25 and $3.35. Previously, Kroger was forecasting a per-share profit no higher than $3.10.
But despite the positive results and forecast, that wasn't enough to keep shares of this normally stable stock from falling in value.
For dividend investors, this can make for an attractive buying opportunity. The drop in price means the stock is now yielding close to 2% -- well above the S&P 500 average which is hovering around 1.3%. On a $15,000 investment, you could be collecting $300 in annual dividends from the stock.
Although Kroger many not be a top growth stock, its shares could still rally from here. The company made share repurchases totaling $349 million during this past period and has authorization to purchase more stock before the year is over. Plus, as investors grow concerned about the economy and high-valued growth stocks, a safe buy like Kroger could attract some attention – especially if COVID-19 cases continue to climb in the months ahead.
But even if you're not overly bullish on the stock's potential to rise in value, if nothing else, Kroger makes for a solid income investment. With the company increasing its dividend payments for 15 years in a row and now raising its guidance yet again, there's little doubt that you'll be earning more than just 2% from its dividend in the long run.
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