Key Points
Costco has paid out five one-time dividends over the last 14 years. It's due for another one soon.
This is not the quarterly distributions, which Costco has increased for 22 straight years.
With Costco's cash and short-term investments growing from $15 billion to $21 billion since its last special dividend, this should be a record payout for the chain.
I don't want to wait a few paragraphs to answer the question posed in the headline. I would be stunned if Costco (NASDAQ: COST) doesn't declare a special dividend before the end of this year. In fact, I am confident enough to propose what I will do if Costco skimps on a one-time payout in 2026.
Did you see the 2006 movie Idiocracy? Well, I will stand outside of my local warehouse club, wearing a bib with my photo on it. I will repeatedly greet guests coming in, with a full-on monotone: "Welcome to Costco, I love you."
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If you didn't see the movie, I'll wait.
Image source: Getty Images.
It's more than just pocket change
History is my favorite teacher. Looking back over the past several years, there's a certain cadence to when Costco doles out its special distributions. Unlike the quarterly dividends -- which have been increased for 22 consecutive years -- the world's largest warehouse club operator has spent the last 14 years returning excess cash to investors every two or three years.
Here is the timeline for each of those five bonus payouts.
- Dec. 27, 2023: $15 a share
- Dec. 1, 2020: $10
- May 8, 2017: $7
- Feb. 5, 2015: $5
- Dec. 6, 2012: $7
There is no promise of a chunky -- and lately, growing -- distribution every two to three years. When Costco increased its membership fee in 2024, it was more than seven years removed from its last hike. Costco had raised prices on its Gold Star and Executive memberships every four to five years before that.
It's not the same, though. Maybe Costco was just trying to wait longer after the COVID-19 recovery process before boosting its annual cover charge. Special dividends are largely for handing over excess cash to investors, and there is no time like the present for that present.
Costco had $15 billion in cash and short-term investments on its balance sheet at the end of fiscal 2023. Investors received $15 a share in a special distribution. It closed out fiscal 2026 with $21 billion in greenery on its balance sheet. Will it pay out a $21-per-share distribution come December? Will it check that back to $20 per share to keep the number round and give it some more expansion money?
Investors will win either way. In fact, maybe we can all win if this perennial safe stock skips the special dividend in the final three months of the year. It would signal bigger plans to build out its empire, particularly overseas, where fewer than a third of its stores are currently located. You would also win as I humiliate myself, greeting people on their way into a Miami Costco.
"Welcome to special dividend investing. I love you."
Rick Munarriz has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.