This Popular Stock Wall Street Loves Grew Its Dividend 382% Last Year

By Trey Thoelcke Published Apr 4, 9:10AM EDT

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This Popular Stock Wall Street Loves Grew Its Dividend 382% Last Year — © YvanDube / iStock Unreleased via Getty Images

Investors love dividends for many reasons. They provide assurance that a company is financially healthy enough to reward investors. Dividend stocks tend to perform better in market downturns and recessions. Dividends may offer tax advantages and help mitigate losses. And they offer total return (stock appreciation plus distributions), which is attractive for income-seeking investors. So a big dividend hike, like at Costco Wholesale Corp. (NASDAQ: COST | COST Price Prediction) last year, is sure to garner investor attention.

Costco’s quarterly dividend increased last year from $0.90 per share to $1.02, a 13.3% increase. But that’s not all, because the retailer also paid out a special dividend of $15 a share last year. Together, that equates to an increase of 381.8% for the year. The company is no stranger to special dividends. It also paid them out in 2012, 2015, 2017, and 2020, with the most recent being the largest.

Costco has also been a Wall Street darling with all but one of the 36 analysts covering the stock having favorable outlooks for next year. One analyst even has a price target of $905 over the next 52 weeks.

Costco is not a Dividend Aristocrat, meaning that it has not increased its payout every year for at least 25 years. Setting aside the special dividends, though, the payout has been growing since it was $0.10 a share back in 2004.

Costco’s Prospects

Costco’s famous membership perks.

This dividend payer operates more than 870 membership warehouse locations worldwide that offer branded and private-label products in a wide range of merchandise categories, including groceries, appliances, sporting goods, tires, office supplies, and gasoline. The company was founded in 1976 and is based in Issaquah, Washington. Costco’s closest competitors are Sam’s Club, a subsidiary of Walmart Inc. (NYSE: WMT), and BJ’s Wholesale Club Holdings Inc. (NYSE: BJ). (This is how much money Costco makes every minute.)

The company has undergone a management shakeup, with former CEO Craig Jelinek stepping down at the beginning of this year and being replaced by former Chief Operating Officer Ron Vachris. More recently, Chief Financial Officer Richard Galanti departed and was replaced by Gary Millerchip, former Kroger CFO.

There has also been some speculation that Costco may follow the leads of Walmart and Chipotle by splitting its stock again this year. The company last did so over 24 years ago, and the stock is up about 1,355% since then to around $705 a share.

Costco’s share price increased 44.6% last year and is about 7% higher so far this year. It hit an all-time high of $787.08 last month. That is higher than the consensus price target. However, as mentioned above, the high price target is up at $905, which represents a gain of about 27% in the next 12 months. The consensus recommendation of analysts who follow the stock is to buy shares.

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.