Tuesday's Market Minute: Costco Announces $10/Share Special Dividend

Costco Wholesale Corporation COST shares are trading higher in Tuesday’s premarket session after announcing a special dividend of $10 dollars per share Monday after-hours. The dividend will be about $4.4B in total and will be eligible to all shareholders as on December 2, payable on December 11. Costco stated this new dividend will be funded by existing cash.

Following the announcement, the company’s CFO Richard Galanti said, “This special dividend, our fourth in eight years, is our latest step to reward shareholders. Our strong balance sheet allows us to pay this dividend, while preserving financial and operational flexibility to continue to grow our business globally.”

Although this is the company’s first declaration of a special dividend since April 2017, the retailer did declare a quarterly dividend of $0.70 a share, up by 5 cents, back in April 2020. In 2017, Costco declared a special dividend of $7 per share, preceded by the $5 dollar per share dividend announced in 2015. Costco closed 0.25% higher Monday for a price of $379.79, which puts the stock up over 29% year-to-date and over 6% this month.

Only about 2% of companies in the Russell 3000 Index have paid special dividends so far this year. Following pandemic-related market volatility, several companies have announced the suspension or withholding of their dividend. Some of these companies include Wells Fargo & Co WFC, Dick’s Sporting Goods Inc DKS, Gap Inc GPS, Boeing Co BA, Carnival Corp CCL, and Las Vegas Sands Corp. LVS – just to name a few. Across all U.S. markets, common dividend payments were down over $42B from the same period one year ago.

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