Why Kroger (KR) is a Must-Have Dividend Play in 2026

The search for reliable dividend plays in 2026 has become increasingly competitive, but The Kroger Co. (KR) stands out as a compelling candidate. With a 2.16–2.24% dividend yield as of late 2025, a robust 5-year dividend growth rate of 15.90%, and a $2.9 billion share repurchase program, Kroger is positioning itself as a cornerstone of income-focused portfolios. This analysis examines how Kroger's dividend sustainability, strategic capital allocation, and resilient grocery business make it a must-have for investors navigating macroeconomic uncertainty.

Dividend Sustainability: A Track Record of Growth and Stability

Kroger's dividend growth over the past five years has averaged 15.90%, reflecting its commitment to rewarding shareholders. This trajectory accelerated in recent years, with a 30.00% average annual growth rate from 2022 to 2025. Such consistency is underpinned by the company's strong cash flow generation and strategic focus on value-conscious consumers. For instance, Kroger's private-label brands, which now account for a significant portion of its sales, offer higher margins and customer loyalty, directly supporting its ability to sustain and grow dividends.

The current dividend yield of 2.16–2.24% (as of late 2025) is particularly attractive in a market where yields on high-quality equities remain modest. According to the company's latest earnings report, this yield, combined with historical growth, suggests that Kroger's dividend is not only safe but poised for further expansion. Analysts at Macrotrends note that Kroger's dividend history spans over five decades, with only minor adjustments during economic downturns, underscoring its resilience.

Strategic Buybacks: Enhancing Shareholder Value

In December 2025, Kroger's board approved an additional $2.0 billion in share repurchase authority, bringing the total available buyback capacity to $2.9 billion. This follows a $7.5 billion authorization in December 2024, reflecting the company's confidence in its balance sheet and long-term growth prospects. The repurchase program is funded entirely by operating cash flow, ensuring it does not strain Kroger's investment-grade credit profile.

Ron Sargent, Kroger's CEO, emphasized that the buybacks align with the company's "disciplined capital allocation strategy," which prioritizes returns to shareholders while maintaining flexibility for strategic investments. Since 2015, Kroger has repurchased 35% of its outstanding shares, a move that has historically boosted earnings per share (EPS) and amplified dividend returns. With no expiration date on the repurchase authorizations, investors can expect continued value creation as market conditions permit.

Favorable Macroeconomic Tailwinds: Grocery Demand Remains Resilient

Kroger's core business is benefiting from structural shifts in consumer behavior. Identical sales without fuel rose 3.4% in Q2 2025, outpacing expectations, driven by price cuts, private-label promotions, and a shift toward food-at-home spending. E-commerce sales, a critical growth driver, surged 15% in Q1 2025 and 16% in Q3, reflecting the company's digital transformation.

The macroeconomic environment further supports Kroger's outlook. As inflation moderates and wage growth lags, households are prioritizing value, a sweet spot for Kroger's "Our Brands" portfolio, which consistently outperforms national brands. The company has raised its full-year 2025 guidance, now projecting identical sales growth of 2.7–3.4% and adjusted EPS of $4.70–$4.80. These metrics suggest that Kroger's business model is not only resilient but adaptive to evolving consumer needs.

Conclusion: A Dividend Play Built for the Long Term

Kroger's combination of a growing dividend, strategic buybacks, and a resilient grocery business makes it a standout in 2026. With a yield that outpaces many peers and a capital allocation strategy that prioritizes shareholder returns, the company is well-positioned to deliver both income and capital appreciation. As macroeconomic tailwinds persist and Kroger continues to innovate in value-driven retail, investors seeking a reliable dividend play would be wise to consider adding KR to their portfolios.