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Costco Announces Unprecedented Special Dividend

December 15, 2023

Costco’s CFO, Richard Galanti, previously hinted at a special dividend in earnings calls, and that day has finally arrived. On Thursday, the wholesale retailer declared a distinctive cash dividend of $15 per share, scheduled for Jan. 12, 2024. This extraordinary payout is in addition to the company’s regular quarterly dividend.

This encouraging news follows a positive quarterly financial report, further proving Costco’s strength and resilience amidst challenging macroeconomic conditions. Most notably, the report revealed a significant year-on-year surge in earnings per share.

This upcoming special dividend will be Costco’s fifth. Previously, the company had issued special dividends in 2012, 2015, 2017, and 2020, amounting to $7, $5, $7, and $10 respectively. Thus, at $15, the 2024 special dividend registers as the company’s most substantial to date.

This hefty dividend payout marks a massive $6.7 billion disbursement to shareholders. With Costco’s considerable net cash position, the company maintains low interest expenses, passing on cost savings to its members. The recent fiscal first quarter saw Costco with $7 billion in debt and a substantial $18 billion in cash, cash equivalents, and short-term investments.

Costco also provides a growing quarterly dividend of $1.02 per share. This, along with the special dividend, helps to support the company’s high stock valuation, helped by a 40% surge in year-to-date stock price. Costco’s most recent earnings surpassed analyst expectations, with total revenue of $57.8 billion, up from $54.4 billion the previous year. Earnings per share saw a 17% year-over-year rise, reaching $3.58.

Strong sales were boosted by the rising demand for Costco’s groceries and essentials along with a significant rise in membership fee revenue by over 8%. Given the indications from the management of a likely increase in membership fees, it wouldn’t be surprising to see a hike in 2024.

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