Costco reported fiscal third-quarter revenue that surpassed expectations, with earnings per share aligning with the LSEG consensus estimate. Despite this positive performance, shares declined approximately 3% in early trading. Analysts, including Bernstein's Zhihan Ma, suggest that a special dividend may be forthcoming due to Costco's strong cash position.
Bank of America analyst Christopher Nardone noted that Costco has a history of issuing special dividends every 2-3 years, with the last one being in January 2024. He estimates that to achieve a similar yield to the previous special dividend of 2.4%, the upcoming payout would need to be around $24 per share.
Costco's stock has risen 15% year to date, and while shareholders currently receive a regular quarterly dividend yielding 0.59%, the anticipation of a special dividend could further enhance investor sentiment and stock performance