Costco falls after earnings. But shareholders could get a special boost soon
Investors weren’t impressed by Costco ‘s latest financial results, but they may soon have reason to be happy anyway. The warehouse club’s fiscal third-quarter revenue topped expectations and its earnings per share matched the LSEG consensus estimate. Yet shares were down about 3% in early trading on Friday. While Costco did not announce a special dividend — a one-time payment outside of the regular dividend cycle — some on Wall Street anticipate one is on the horizon. That could spark a rally in Costco’s stock. “Given its strong cash position, we wouldn’t be surprised to see a special dividend,” Bernstein analyst Zhihan Ma said in a note Friday. COST YTD mountain Costco year to date Bank of America anticipates the payout announcement will occur in the coming months. “COST’s last special dividend was paid in Jan. ’24, and the company has historically distributed special dividends every 2-3 years,” analyst Christopher Nardone said in a note Thursday. “We think an announcement could come over the next few [quarters] given COST’s healthy cash balance.” The previous special dividend yield was roughly 2.4%, he noted. In order to deliver a similar yield at the current stock price, the payout would need to be about $24 a share, he calculated. Costco’s recent history of special dividends looks like this: January 2024: $15 per share; December 2020: $10 per share; May 2017: $7 per share; February 2015: $5 per share; December 2012: $7 per share. In the meantime, Costco shareholders are being paid a regular quarterly dividend, which currently yields 0.59%. The stock is up 15% year to date.
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