SUPERVALU INC. (SVU)’s Fall From High-Dividend Grace

Moreover, even SUPERVALU’s direct competitors did a better job of differentiating themselves during the recession. Before the company’s announcement in late 2009 that it would cut its dividend in half, SUPERVALU had posted six straight quarters of declining same-store sales. By contrast, The Kroger Co. (NYSE:KR) relied less on lowering prices and more on initiatives to boost the quality of its own offerings, building a vertically integrated store-brand production chain and doing a better job of bringing in organics and other healthy offerings of its own.

SUPERVALU Dividend data by YCharts.

Combine all those headwinds, and SUPERVALU had few choices but to cut back on its dividend. Moreover, even at its reduced rate, SUPERVALU’s dividend proved unsustainable, and now, the company’s much-smaller size will likely put demands on its capital for a long time to come.

Will SUPERVALU ever pay dividends again?
At this point, it’s unclear when the company might once again be able to make a dividend payout. But even if SUPERVALU rejoins the ranks of dividend stocks, it will still stand as an example of how even the best dividend stocks can fall from grace. It’s important to keep your eyes on all your stocks, even the ones that seem most resilient, in order to avoid unpleasant surprises.

The article SUPERVALU’s Fall From High-Dividend Grace originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Whole Foods Market and owns shares of SUPERVALU and Whole Foods Market.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.