The Kroger Co. announced on Thursday that its board of directors has approved a dividend increase for its shareholders, making it the 18th year in a row the company has raised the annual payout, Supermarket News reports. 

The company said the quarterly dividend, which is increasing from $1.16 to $1.28 per year, will pay out 32 cents per share on Sept. 1. The company reinstated the dividend in 2006 and has seen it increase at a compound annual growth rate of 13.5%. 

"The dividend increase is a reflection of the board of directors' confidence in the strength of our diverse model," Kroger Chairman and CEO Rodney McMullen said in a press release. "Kroger is delivering consistent operating results and generating strong free cash flow, which enables us to return value to shareholders while investing to grow our business."

The company said in a press release that its capital allocation strategy “is to use its free cash flow to invest in the business to drive long-term sustainable net earnings growth while also maintaining its current investment grade debt rating and returning capital to shareholders.”

The announcement comes a week after Kroger released its Q1 earnings report that showed a decline in earnings for the quarter, due in part to pharmacy margin pressures, which the company said are expected to continue into Q2.

Kroger reported that net income dropped 1.6% year over year to $947 million, while sales ticked up 0.2% to $45.27 billion. 

“Better than expected performance in grocery helped us manage fuel and health and wellness results that were behind expectations,” McMullen said during the Q1 earnings call.

Meanwhile, the grocery giant is preparing for its day in court to defend its proposed $24.6 billion acquisition of Albertsons. 

McMullen told shareholders on Thursday that the merger, if approved, would not result in layoffs and that the company will invest $500 million to lower grocery prices and $1.3 billion to upgrade Albertsons stores. 

“Employees will benefit from Kroger's commitment to invest $1 billion to raise wages and comprehensive benefits, further building on our $2.4 billion in incremental investments since 2018,” McMullen said, according to a transcript published by The Motley Fool. “As union membership continues to decline nationwide, this merger will secure union jobs. And communities will benefit from the strength and the ability of the combined company to accelerate Kroger’s commitment to ending hunger.”