Costco Wholesale (COST) built its loyal following on giant packs, cheap gas, and the membership card shoppers flash at the door.
On Nov. 10, it rolled out a bulk deal that none of those shoppers can put in a cart. This one goes only to people who own the stock.
The warehouse club declared a special cash dividend of $30 per share, according to its filing with the Securities and Exchange Commission.
The payment totals about $13.3 billion. It lands on Dec. 4 for shareholders of record at the close on Nov. 24.
Shares rose 1.7% in after-hours trading following the announcement. What stands out is how much larger this check was than the last one.
Also read: Costco just passed Kroger in a grocery ranking that matters
Costco’s last big payout was half this size
Costco’s previous special dividend came nearly three years ago. It paid $15 per share on Jan. 12, 2024, according to a company filing. That payout totaled about $6.7 billion, Costco’s largest until now, Seeking Alpha reported.
Costco can afford a check twice that size because it has been sitting on a big stack of cash. It ended its latest fiscal year with about $21.3 billion in cash and short-term investments, according to Stock Analysis. The new payout uses more than 60% of that pile.
The check also tops a full year of free cash flow, the money left after paying for warehouses and equipment. Costco generated about $9.4 billion of it last fiscal year, Stock Analysis data shows, so the payout dips into older savings, too.
The bundle shoppers won’t see at the register
The dividend did not arrive alone. Costco’s board also approved a new $4 billion stock buyback plan running through November 2030, according to the filing. It replaces a 2023 plan under which Costco bought back $3.1 billion of stock.
Together, the two moves form a bundle built for owners, not members. Nothing in the announcement changes what members pay or what sits on the shelves.
Plenty of everyday investors own a piece of this payout without realizing it. Funds that hold Costco collect its dividends and pass that income to their investors. Seeking Alpha names the three funds most heavily weighted toward Costco, and Stock Analysis shows each slice:
- About 14% of the Global X PureCap MSCI Consumer Staples ETF (GXPS) sits in Costco.
- Roughly 12% of the Fidelity MSCI Consumer Staples Index ETF (FSTA) is Costco stock.
- About 12% of the Vanguard Consumer Staples ETF (VDC) is Costco.
And there’s a twist. Walmart (WMT) is the largest holding in all three funds. Owners collecting Costco’s check are betting even more on its chief rival.
Costco stock is trading near its record high
Costco shares, meanwhile, are trading near their all-time high of $1,096.50. The company is worth about $472.5 billion, more than Coca-Cola (KO), Procter & Gamble (PG), or Home Depot (HD).
Buybacks have played a small part at Costco. The company spent about $1.2 billion repurchasing stock in its latest fiscal year, Stock Analysis data shows. With shares near a record, a one-time check rewards owners without buying stock at peak prices.
More Costco:
- Walmart takes aim at Costco with a new shopping perk
- Aldi cuts prices in a move that could pressure Costco
- Costco makes a seasonal food court change
Wall Street likes the business but sees limited room to run. Of the 41 analysts tracking Costco, 26 rate it a Buy or Strong Buy, according to Stock Analysis. Their average price target of $1,071 sits roughly where the stock already trades.
A few analysts are reaching higher. J.P. Morgan lifted its target to $1,150 from $1,015 on Nov. 5. For long-term holders, the bigger draw may be a payout habit that keeps growing.
Costco’s checks keep getting bigger
Costco’s special payouts started at $7 per share in 2012, according to Seeking Alpha. They have now more than quadrupled, arriving every two to four years.
The next question is how fast Costco can refill its cash pile. Membership fees and thin markups built this one, and they will have to build the next.
The lesson reaches beyond one retailer. Costco just showed cash-rich companies with pricey shares a simple playbook. When buying back stock costs too much, mail owners a check instead.
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