5 Best Undervalued Dividend Stocks to Buy Now

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In this article, we discuss 5 best undervalued dividend stocks to buy now. If you want to read our detailed analysis of value and dividend stocks and their performance in the past, go directly to read 11 Best Undervalued Dividend Stocks to Buy Now

5. The Kroger Co. (NYSE:KR)

Number of Hedge Fund Holders: 42
P/E Ratio (TTM) as of April 17: 15.6 

The Kroger Co. (NYSE:KR) is an Ohio-based retail company that operates supermarkets and multi-department stores throughout the country. In March, Northcoast upgraded the stock to Buy with a $60 price target and appreciated the company’s recent quarterly earnings. The company is one of the best dividend stocks on our list.

On March 9, The Kroger Co. (NYSE:KR) declared a quarterly dividend of $0.26 per share, which was in line with its previous dividend. In 2022, the company stretched its dividend growth streak to 16 years. The stock’s dividend yield on April 17 came in at 2.18%.

As of the close of Q4 2022, 42 hedge funds tracked by Insider Monkey reported having stakes in The Kroger Co. (NYSE:KR), compared with 49 in the previous quarter. The collective value of these stakes is over $4 billion. With 50 million shares, Berkshire Hathaway was the company’s leading stakeholder in Q4.

Oakmark Funds mentioned The Kroger Co. (NYSE:KR) in its Q1 2023 investor letter. Here is what the firm has to say:

The Kroger Co. (NYSE:KR is the second-largest grocery retailer in America, behind only Walmart. Although the grocery industry is highly competitive, Kroger’s scale advantages allow it to offer a more compelling value proposition than smaller peers and earn higher returns on capital. In recent years, the market has assigned Kroger a lower multiple due to concerns that e-commerce would disrupt traditional brick-and-mortar grocery businesses. However, we believe Kroger’s performance through the pandemic highlighted that its store footprint, distribution infrastructure, technology investments and strong brand all position the company well for a world with higher online grocery adoption. The stock trades for just 10x our estimate of next year’s EPS, which we believe is attractive given Kroger’s competitive positioning and earnings growth outlook. The pending merger with Albertsons has the potential to drive accelerated earnings growth and further scale advantages. If the merger is not approved, the company will have the capacity to return over 25% of its market cap to shareholders.”

Follow Kroger Co (NYSE:KR)


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