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Kroger Offers 2-for-1 Stock Split

Kroger Offers 2-for-1 Stock Split

Monday, June 29th, 2015

Kroger has announced a two-for-one stock split, its first since 1999 and fifth in the company's history.

According to Investopedia, a two-for-one stock split is an action that increases the number of the corporation's outstanding shares by dividing each share by two. This diminishes its price, but keeps the stock's market capitalization the same. Each stockholder receives an additional share for each share held, but the value of each share is reduced by half, or simply put, two shares now equal the original value of one share before the split.

Rodney McMullen, CEO, KrogerCEO Rodney McMullen said at the company’s annual meeting that this move reflects Kroger's confidence in future financial performance. "The stock split will increase the accessibility of our shares and liquidity in the trading of our shares," McMullen continued. “We are especially excited that the stock split will make Kroger's common shares more accessible to all of our associates." 

Kroger shareholders as of July 6 will each receive an additional Kroger share, increasing the total outstanding shares from 481 million to 962 million. Kroger has also announced they will raise the quarterly dividend to 21 cents per share on a pre-split basis. Shareholders will be paid 10.5 cents per split-adjusted share. 

"By all measures, 2014 was a blockbuster year," McMullen said. "Kroger's strong financial position has allowed the company to return approximately $11.7 billion to shareholders through share repurchases since January 2000. We remain committed to delivering value to shareholders. In fact, over the last four quarters, the company has returned more than $1.1 billion to shareholders through share buybacks and dividends combined.” 

According to Google Finance, shares of Kroger peaked at $74.03 after the announcement, up $1.08 or 1.5 percent.