Costco Declares a Record $30 Special Dividend Worth $13.3 Billion and Renews Its $4 Billion Buyback
Costco Wholesale will pay shareholders a $30-per-share special dividend totaling about $13.3 billion, payable Dec. 4 to holders of record at the close of business on Nov. 24, the company announced Tuesday.
The board also reauthorized a stock repurchase program of up to $4 billion that runs through November 2030.
The new buyback replaces a $4 billion program adopted in 2023 and scheduled to expire in January 2027, under which Costco had repurchased $3.1 billion of stock.
Shares rose 1.5% in extended trading after the announcement, Investing.com reported. Investors must be on the books by Nov. 24 to collect, and the stock is expected to go ex-dividend on or around that date, investingLive reported.
The payout is the largest special dividend in Costco’s history and double the $15 it paid in January 2024. Earlier specials were $7 in 2012, $5 in 2015, $7 in 2017 and $10 in 2020, according to CNBC.
Wall Street had been watching for it. “COST’s last special dividend was paid in Jan. ’24, and the company has historically distributed special dividends every 2-3 years,” Bank of America analyst Christopher Nardone wrote in May, CNBC reported.
Nardone estimated at the time that Costco would need to pay about $24 a share to match the roughly 2.4% yield of its 2024 special dividend, a bar Tuesday’s announcement cleared.
Bernstein analyst Zhihan Ma struck a similar note in May. “Given its strong cash position, we wouldn’t be surprised to see a special dividend,” Ma wrote, according to CNBC.
The $30 figure “is likely to be read as a positive surprise on size, not just timing,” investingLive wrote, adding that the bigger question for investors is how quickly Costco rebuilds the cash it is paying out.
Sales Momentum Behind the Payout
The announcement came a week after Costco reported October net sales of $24.50 billion, up 12.6% from $21.75 billion a year earlier, the company reported. Total comparable sales rose 11.1%, or 7.3% excluding gasoline prices and foreign exchange.
U.S. comparable sales rose 8.1% on that adjusted basis, and digitally enabled sales jumped 22.5% from a year earlier, Costco said.
Not every analyst is cheering. Freedom Broker downgraded Costco to hold from buy on Tuesday, citing valuation, while raising its price target to $1,050 from $1,010, Investing.com reported.
In a separate filing, Costco disclosed that director Helena Foulkes resigned from its board effective Nov. 7 after being elected governor of Rhode Island, TipRanks reported. The company said her departure was not due to any disagreement.
Costco operates 945 warehouses, including 653 in the United States and Puerto Rico, according to its announcement, which did not say how the dividend or buyback would be funded.
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