Discount bulk-goods retailer Costco Wholesale (NASDAQ:COST | COST Price Prediction) is known as a dividend superstar, but not for the reasons you might expect. At first glance, it might look like Costco’s dividends are unimpressive.
Bear in mind, though, that Costco pays more than one type of dividend. Moreover, while Costco stock’s yield from regular dividends isn’t huge, Costco is still a dividend grower with potential. So, after digging deep into the company’s financials and dividend history, you’ll surely be convinced to grab a few COST shares today.
These Dividends Are Definitely “Special”
To start off, we need to differentiate between two types of dividends. There are regular dividends that Costco pays out on a quarterly basis, but there are also special dividend payments that Costco has made from time to time.
I’d say “special” is the right word for these payments because they’re substantial. Looking back through Costco’s dividend history, the company paid special per-share dividends of $7 in 2017, $10 in 2020, and $15 in early 2024.
Think about this for a moment. COST stock traded at around $690 on January 12, 2024. Now, imagine if you had woken up that morning and found a cash payment of $15 per share in your account. That would definitely have been a “special” day for you!
Plus, Costco’s special dividends are paid in addition to the company’s regular dividends. You might call the special dividends an occasional thank-you payment for loyal investors.
Thus, Costco’s special dividends are absolutely legendary, but they don’t happen very often. Besides, it’s difficult to predict when Costco might announce more special dividend payments in the future. Due to tariff-related economic uncertainty, it seems unlikely that Costco will pay a special dividend this year.
Regular Dividends: Small but Growing
On the other hand, investors can count on Costco paying out its regular quarterly dividend distributions. After all, Costco has paid its regular dividends every three months for many years.
Don’t assume that you’ll become fabulously wealthy overnight based on Costco’s regular dividends, though. To be completely honest, Costco’s regular dividend payments aren’t spectacular.
We can use Costco’s most recent dividend payment from May 16, 2025, as an example. On that day, Costco’s long-term investors received a cash distribution of $1.30 per share.
That might sound like a big payment, but is it really? COST stock traded at around $1,025 per share on May 16. Therefore, the regular dividend distribution of $1.30 per share would translate to a quarterly yield of 0.127%, or an annual yield of around 0.5%.
The historical trends suggests that Costco’s next three regular dividend distributions will probably also be $1.30 per share. Hence, unless the COST stock price falls dramatically, Costco’s forward annual dividend yield will likely be around half a percentage point.
That’s not a yield that most dividend enthusiasts would get excited about. And again, there’s no way to predict when Costco might announce the next special dividend payment.
Still, Costco’s dividend growth history suggests that the company could ramp up its payments in the future. In this regard, the math actually looks pretty good for Costco and its loyal shareholders.
In February of 2024, Costco paid a regular dividend of $1.02 per share. Then, in May 2024, Costco increased its dividend payment to $1.16 per share, representing growth of 13.7%.
Fast-forward to May of 2025, and Costco increased its regular dividend payment to $1.30 per share. This equates to growth of 12% when compared to the prior dividend payment of $1.16 per share.
Costco Can Afford to Pay More
Not only is Costco a dividend grower, but the company is financial sound. This means Costco can probably afford to pay bigger and bigger dividends in the future.
The numbers indicate that Costco remains a mammoth retailer with a strong balance sheet. As of May 11, 2025, Costco had $13.836 billion worth of cash and cash equivalents, up from $9.906 billion as of September 1, 2024.
As of May 11, 2025, Costco had $75.482 billion in total assets and $48.357 billion in total liabilities. The point here is that Costco has more than enough cash and/or assets to cover its expenses.
Additionally, we can observe that Costco’s dividend payout ratio (the percentage of Costco’s earnings that are paid out as dividends) is currently around 27%. I generally don’t start to get concerned about dividend over-payment until the ratio gets above 50%, and anything below 35% indicates that the company can easily pay out its current dividends.
Sure, there are tariff-related concerns in 2025, but for now, it appears that Costco can afford to increase its regular dividend payments in the coming quarters. In time, Costco could become more than a special dividend legend and just might impress its investors with enticing regular dividend payouts.
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