Will Costco Wholesale Deliver Another Big Special Dividend in December?

With the holiday season fast approaching, investors in Costco Wholesale (COST) are speculating about the possibility of another special dividend. The retailer has a history of announcing special dividends in December, with the last three occurring in the past five years. However, the company has yet to pay special dividends in consecutive years. So, the question remains: is another big special dividend coming up for Costco Wholesale investors in December?

Costco Wholesale has announced a special dividend in 3 of the past 7 years. Last year, the company paid a special dividend of $15 per share, which was a significant increase from the previous largest special dividend of $10 per share in 2020. This trend suggests a growing trend in special dividend payments.

One factor that could influence Costco's decision to pay another special dividend is its strong financial performance. In the first quarter of fiscal 2024, the company reported net sales of $56.72 billion, an increase of 6.1% from the previous year. Additionally, net income increased by 17% to $1.59 billion, driven by strong sales and membership fee revenue.

Another factor to consider is the company's cash flow management strategy. Costco operates with a significant net cash position, enabling it to maintain a low cost structure and pass savings onto members. With about $7 billion of debt and nearly $18 billion of cash, cash equivalents, and short-term investments, the company has plenty of cash to spare for special dividends.

However, the current economic environment may present challenges for Costco's ability to pay another special dividend. While the company's profit growth has been strong, slower growth and more challenging economic conditions could make it difficult to justify another payment this year. Additionally, the company may be hesitant to pay another special dividend in back-to-back years, as it has not done so previously.



In conclusion, while the possibility of another big special dividend from Costco Wholesale in December is enticing, investors should not rely on this as a guarantee. The company's history of special dividend payments, strong financial performance, and cash flow management strategy suggest that another payout is possible. However, the current economic environment and the company's previous pattern of special dividend payments may present challenges. It is essential for investors to stay informed about Costco's upcoming earnings reports and any announcements regarding special dividends. Ultimately, a balanced and analytical approach to investing, considering multiple perspectives and factors, is key to making informed decisions in the stock market.