Inside Costco Hides A Massive Dividend Dynamo

"Costco ( NASDAQ:COST ) is a retail giant known for its sprawling warehouses, bulk discounts, and loyal membership base. But beneath its reputation for value shopping lies a lesser-known strength: a robust dividend program that rewards long-term investors. While the company's dividend yield may appear modest at first glance, its consistent growth transforms it into a powerful wealth-building tool, making it a compelling investment for patient shareholders."

"In 2025, the warehouse club's annual dividend stands at $4.64 per share, offering a yield of about 0.5% based on its current stock price. At first, this yield seems underwhelming compared to high-yield stocks like AT&T ( ) at 4.3% or even Target ( ) at over 5%. However, Costco's secret lies in its dividend growth rate, which has averaged around 12% annually over the past decade."

"This consistent growth means that investors who bought Costco shares years ago are now earning significantly more on their initial investment. For example, a shareholder who purchased Costco stock 10 years ago when the dividend was $1.42 per share would now receive $4.64 per share annually. This growth pushes the yield on cost - a measure of the dividend relative to the original purchase price - to an impressive 3.3%. The result is a dividend that feels far more substantial than the headline yield suggests."

Costco combines steady annual dividend increases and occasional special payouts, having raised its regular dividend annually for over two decades. The 2025 annual dividend is $4.64 per share, a yield near 0.5% on the current stock price, but dividend growth averaged about 12% annually over the past decade. Long-term shareholders benefit from yield on cost; investors who purchased shares ten years ago when the dividend was $1.42 now receive $4.64, producing a yield on cost near 3.3%. Yield on cost measures current dividend relative to original purchase price, underscoring the value of patience and compounding.

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