On Thursday, Costco Wholesale’s announcement of a dividend increase led to a significant rise in the company’s stock, nearly 3%, surpassing the 0.1% rise of the S&P 500 for that trading session. The retailer declared a new quarterly dividend of $1.30 per share, marking a substantial 12% increase from the previous $1.16 payout. This new dividend will be distributed on May 16 to shareholders recorded as of May 2, resulting in a yield of 0.5% based on the most recent closing share price.
This yield remains below the current 1.4% average yield of S&P 500 index components. Most investors perceive Costco as more than just an income-generating stock; it is viewed as a retailer with consistent growth in key financial fundamentals, attracting millions of shoppers. Despite this perception, Costco’s management regularly endeavors to enhance shareholder value through substantial dividend increases, maintaining a streak of annual raises for over 20 years. The last increase was a 14% rise to $1.16 per share.
While the dividend is not the primary driver of Costco’s stock appeal, it is a welcomed addition for investors. As Costco continues to perform well, further double-digit dividend hikes are anticipated in the future, adding to the attractiveness of holding the stock.
