Tracking Costco’s Special Dividend and Why Investors Shouldn’t Wait

Costco Wholesale (NASDAQ:COST) is a retail titan that’s rewarded shareholders handsomely over the past several years. Not just with market-crushing gains (shares gained over 230% in the last five years), but with some very generous dividend hikes and the occasional special dividend.

Indeed, Costco last paid out a special dividend of a whopping $15 per share back at the start of 2024. Given that special dividends only come along every couple of years, specifically during times of great prosperity and excess cash, I wouldn’t get my hopes up for another special dividend in the second half. And while Costco has been firing on all cylinders this year, I’d much rather the firm reinvest in growth initiatives so that it can take its unique growth story to the next level.

Key Points in This Article:

• Over the past decade, Costco paid a special dividend at varying intervals (2015, 2017, 2020 and 2024).
• COST is a strong buy with shares trading just shy of $1,000.
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Looking for Another Special Dividend From Costco? You Could Be Waiting a Few Years

In the meantime, don’t hold your breath for the next special dividend, especially since it’s been a year and a half since the last one. With no news about when the next surprise payout will be, it could be tough to pin down when the next special will arrive, given that such payments are at the discretion of management. In the past decade, they’ve occurred at varying intervals (2015, 2017, 2020 and 2024). About every two to four years seems about right. Given the timing of the last special, I’d say that 2027 or 2028 could be the year of the next Costco special.

In any case, long-term shareholders should stick with the name, even if we don’t get another surprise special dividend until well after 2030. At the end of the day, Costco is a rare defensive growth gem that has what it takes to take more market share across the globe. With inflation-weary consumers likely to keep loading up their baskets wherever there’s a high value proposition to be had, I do think one thing is likely as we march into the second half: Costco is going to be there with juicy deals for its loyal members.

With one of the widest economic moats in all of retail and a lengthy growth runway it can race down, I find COST stock to be a fantastic buy, even if no more special dividends were to be handed out anytime over the next five years. Indeed, it’s quite rare to come across special dividends these days, especially for a growth-oriented firm like Costco, which has no shortage of levers to pull to bolster sales and earnings growth.

Forget Special Dividends. Costco Is a “Buy” for the Stock Appreciation and Dividend Growth

Personally, I think the real reason to start buying in the name is for its strong fundamentals, its stellar growth profile, and its pace of dividend growth. And while shares of the retailer are still commanding a hefty premium, I’d argue that the premium still isn’t hefty enough, especially given the stock’s momentum has slowed a bit year to date. In any case, COST stock is still beating the S&P 500 so far this year, up 8% relative to just over 4% for the major index.

As consumers look to dodge past higher prices caused by tariffs, I think it’s the Costco membership card that could pay the biggest dividends.

Additionally, Costco sweetened the pot with new perks at specific locations. Whether we’re talking about a $10 delivery credit or the ability to shop a bit earlier than regular store hours, it’s not a mystery as to why it’s so hard to cancel an annual Costco membership. Indeed, the obscene crowds at the local Costco suggest that new store openings can’t come fast enough.

Add the firm’s e-commerce catch-up efforts into the equation, and I’d argue that another special dividend would not be the best use of excess free cash flow. I’d much rather management put its foot on the gas on store expansion and e-commerce. In short, Costco stock is a great buy at just shy of $1,000 per share. As for when the next special dividend will arrive, let’s just say I’d be shocked if it arrived within the next 18 months.

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