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Costco's Special Dividend Could Be $12 Per Share

Published Mon, 14 Oct 2019 09:44:49 -0400 on Seeking Alpha

To be sure, investors in Costco probably aren’t buying the shares for the yield at present. With the shares up more than 40% this year, shareholders probably think of the dividend as icing on the cake. In the last two years, the only thing that has put a hiccup in Costco’s climb have been corrections in the market. The shares aren’t exactly cheap, and on the surface the stock’s valuation could be a roadblock for some. That being said, Costco has a much higher hidden yield waiting to be revealed. Looking at the company’s history, investors should expect a yield for 2020 of 5%.
Domestic dominance
One reason Costco investors should have confidence that more is coming from the company, is its dominance over the domestic market. Costco has been the model of consistency when it comes to same-store sales. Comparing Costco and Walmart’s (NYSE: WMT) Sam’s Club business shows significantly better performance from the former.
In the most recent quarter, Costco’s domestic comparable store sales grew by 5.2% year over year. The company’s CFO Richard Galanti said, “Traffic or shopping frequency increased 3.7% worldwide and 3.6% in the U.S.” Where Sam’s Club is concerned, same-store sales increased by 1.8%, but hidden underneath this number, transactions increased by 5%, yet the average ticket declined by 3.8%.

(Source: 9 Surprising Ways to Save at Costco)
If we look at a revenue per store, Costco’s business looks even better. In the last... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
WAL-MART STORES 116.92   26.3 4.44 2.12 1.83

WAL-MART STORES - WMT
WAL-MART STORES - WMT  


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