Costco Wholesale (NASDAQ:COST) is rewarding shareholders with a special dividend of $10 a share.
The grocery retailer has announced that it will spend $4.4 billion to pay the $10 a share dividend to shareholders of record as of the close of business on December 2. It is the first special dividend issued by Costco since 2017.
“This special dividend, our fourth in eight years, is our latest step to reward shareholders,” Chief Financial Officer Richard Galanti said on Monday after the close of markets. “Our strong balance sheet allows us to pay this dividend, while preserving financial and operational flexibility to continue to grow our business globally.”
Costco stock sports a small yield of about 0.7%, compared with about 1.6% for companies listed in the the S&P 500 index. In April, the company declared a quarterly dividend of 70 cents a share, up by five cents, for an increase of nearly 8% -- a sign of Costco’s durability during the pandemic.
Even during the recent Covid-related economic downturn, there has been speculation about when Costco would issue its next special dividend. It hadn’t done so since April 2017 when it declared a one-time dividend of $7 a share. It declared another special dividend in early 2015 of $5 a share, and issued one for $7 a share in 2012.
Costco said that its latest one-time dividend will be funded by existing cash. Special dividends remain rare. Only 2% of the companies in the Russell 3000 Index have paid one this year.
