We recently published a list of the 10 Best S&P 500 Stocks to Buy for Dividend Growth. In this article, we are going to take a look at where The Kroger Co. (NYSE:KR) stands against other best S&P 500 stocks for dividend growth.
Dividend stocks have been attracting increasing interest lately, particularly following the tech sector’s sharp decline in March. While technology companies have been gaining excessive popularity in recent years, the market correction served as a reminder that rapid gains can quickly be erased. In contrast, dividend-paying stocks embody the principle of steady, consistent growth. Although they may not generate the same level of excitement, they tend to offer long-term benefits, especially for investors seeking a reliable source of income.
Bryan Armour, Morningstar’s director of passive strategies, noted that the recent market volatility offers a chance to refocus on fundamental principles. Here are some comments from the analyst:
“With US stocks as a percentage of portfolios at one of the highest levels ever, this is an excellent time for a more diversified portfolio. That’s not to say to sell US stocks, but to diversify into bonds and international stock exposure. We don’t know what’s going to happen, so don’t try to guess. Just hold a diversified portfolio and live to fight another day. Be boring.”
Armour further suggested that investors looking for a safer option might consider exchange-traded funds that invest in companies with a track record of increasing their dividends.
A report by BNY Investments also suggested that with inflationary pressures and market volatility expected to persist into 2025, a dividend-focused strategy could be beneficial. Dividends were highlighted as a potential hedge against inflation while also providing a more stable income stream, making them a crucial element in navigating uncertain market conditions. The report further noted that the opportunity set within the broader market had expanded, as more high-growth sectors—particularly information technology, health care, and industrials—had increasingly embraced dividend payments. As of September 2024, approximately 80% of companies in the wider market were paying dividends, with the technology sector accounting for 24% of those, a notable rise from 13% a decade earlier. This trend underscored the idea that growth and income generation could coexist.
READ ALSO: 15 Dividend Zombies to Invest in
When it comes to dividend investing, stocks with consistent dividend growth are the top choice among investors. A Morningstar report indicates that over the past five years, these stocks have outperformed those offering higher yields in the equity market. The BNY Investments report highlighted that companies that pay and consistently increase dividends tend to demonstrate greater resilience during market downturns, as investors often turn to them for stability in uncertain conditions. These companies also have the capacity to raise dividend payouts in line with or even above inflation, making them particularly attractive to income-focused investors.
In an environment of low interest rates, where bond yields offer limited appeal, dividend-paying stocks have the potential to become even more compelling. With inflation remaining above pre-pandemic levels and possibly rising further, these stocks can serve as an effective hedge, adding to their attractiveness. The report further emphasized that dividends continue to play a crucial role in managing market volatility while providing a steady income stream and protection against inflation. Given this, we will take a look at some of the best dividend stocks with dividend growth.
A section of a grocery store dedicated to organic produce, herbs, and fruits.
Our Methodology
For this article, we looked at dividend stocks in the broader market that have maintained consistent dividend payouts over time. From that list, we chose companies that have increased their dividends by an average of more than 10% annually over the last 5 years. The stocks are ranked in ascending order of their annual average dividend growth in the past five years.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
The Kroger Co. (NYSE:KR)
5-Year Average Dividend Growth Rate: 15.05%
The Kroger Co. (NYSE:KR) is an Ohio-based retail company that operates a network of supermarkets and multi-department stores across the US, with a strategy centered on a diverse retail model. Many locations incorporate pharmacies and fuel centers, enabling the company to attract a broad customer base while reducing dependence on any single revenue stream. Since the beginning of 2025, its stock has risen by over 6%, and its 12-month return came in at over 17%.
In the fourth quarter of 2024, The Kroger Co. (NYSE:KR) reported adjusted earnings per share of $1.14, matching the prior year’s figure and exceeding analysts’ expectations. Revenue came in at $34.3 billion, missing the projected $34.75 billion and reflecting a 7% decline from the same period a year earlier. Operating profit dropped by nearly 24% year over year. However, the company’s Alternative Profit Businesses, which include advertising and data services, contributed $1.35 billion in operating profit, supported by a 17% rise in media-related revenue. Digital sales increased by 11%, underscoring efforts to enhance the shopping experience. In addition, the introduction of more than 900 new products under the “Our Brands” portfolio reinforced its focus on private-label expansion to improve profit margins.
For the fiscal year 2024, The Kroger Co. (NYSE:KR) generated $5.8 billion in operating cash flow, strengthening its position as a reliable dividend payer. Over the year, the company distributed $883 million to shareholders through dividends. It offers a quarterly dividend of $0.32 per share, yielding 1.94%, as of March 26. Kroger has consistently increased its dividend payouts for the past 18 years, coming through as one of the best dividend stocks on our list.
Overall, KR ranks 4th on our list of the best dividend stocks for dividend growth. While we acknowledge the potential of KR as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than KR but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
