Worried about the Nasdaq Tech sale? Buy This Warren Buffett Stock Today

Warren Buffett is one of the most famous value investors of all time. The Oracle of Omaha is widely known for investing in companies with non-fluctuating business models, robust economic moats, and superb dividend yields. Many businesses that meet these criteria are performing remarkably well in today’s overwhelmed economy.

Skyrocketing levels of inflation, the Fed’s hawkish monetary policy and additional issues related to the Russian-Ukrainian war have put equities under severe strain lately. The S&P500 fell 21% since the start of the year, making it one of the worst starts to a year in the index’s history. So let’s explore a Warren Buffett stock that has performed well in today’s economy.

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Kroger does not fear a recession

The People’s Grocery Operator Kroger Company (KR 0.53%) has weathered the latest economic headwinds smoothly, with its stock price rising 5.1% year-to-date. In the first quarter of 2022, the retailer’s total sales rose 8% year-on-year to $44.6 billion, beating Street estimates of 3.6%, and its adjusted earnings per share jumped 21.8%. % at $1.45, crushing the consensus forecast of 13.4%. The company’s GAAP operating profit margin also increased 143 basis points to close at 3.4%.

Due to a strong first-quarter outflow, management raised its guidance for full-year operating profit and net profit. Analysts now expect the company’s revenue to grow 7.1% year-over-year to $147.7 billion, and its adjusted earnings per share to rise 6.5%. % to reach $3.92. Management also expects to generate between $2.0 billion and $2.2 billion in free cash flow (FCF) in 2022, in addition to its $1.4 billion in cash and temporary cash investments on its balance sheet as of first trimester.

Kroger’s consistent cash flow generation allows it to pay a nice dividend to its shareholders. The company currently pays a quarterly dividend of $0.26/share, which translates to a dividend yield of 2.19%. Those who own 100 shares of the grocer, which equates to a $4,750 investment at current price levels, can expect to receive $104 in annual dividends, assuming the dividend amount remains constant. That might not sound like a jaw-dropping number, but it can turn out to be extremely valuable over time, especially during an economic downturn. Today, the combination of Kroger’s long-lasting business and high dividend makes it an intriguing buying opportunity.

Should investors buy Kroger shares?

It’s certainly not a flashy company, but Kroger is a wise investment in today’s slowing economy. Not only does it operate an essential business model – which protects it from major economic downturns – but it also offers investors a solid dividend yield of 2.19%. A key benefit of a good dividend, especially in a bear market, is that investors can expect to receive quarterly payouts regardless of a stock’s performance. I’m confident that Kroger will remain a market leader for the foreseeable future, and its handsome dividend just adds another level of security to its investment profile today.

Luke Meindl has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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