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Costco Hits All-Time High Amid $4 Billion Buyback, Special Dividend
There is something almost quaint about a company that keeps a pile of cash until it becomes conspicuous, then hands it back in one gesture.
Costco has now done it six times in fourteen years. On November 10th, the board declared the largest of them: a $30 per share special cash dividend, roughly $13.3 billion, payable December 4th to shareholders of record on November 24th. The same announcement reauthorized a $4 billion share repurchase program running through November 2030.
Costco reports fiscal first-quarter results after the close on December 10th, which means investors receive the capital return first and the operating evidence second. That sequence is unusual, and it puts a particular weight on what the December print has to say. Shares touched a record high ahead of the upcoming release.
Image Source: StockCharts
A Statement That Doubles the Last One
Scale is the story here. The prior five specials ran $7, $5, $7, $10 and $15 per share, declared in 2012, 2015, 2017, 2020 and 2023, respectively. This one is twice the last, and at $13.3 billion its total exceeds the first four combined. It equates to about twenty quarters of Costco's regular $1.47 dividend, delivered in a single payment.
It is also a genuine drawdown rather than a gesture. Costco closed fiscal 2026 with $20.2 billion in cash and equivalents, up from $14.2 billion a year earlier, and this payout consumes roughly two-thirds of it. Fiscal 2026 operating cash flow was $15.8 billion against $6.4 billion of capital spending, so the check is larger than a full year of free cash flow.
The Buyback Is the Quieter Signal
The repurchase reauthorization deserves more scrutiny than it will get. The program it replaces was also $4 billion, adopted in January 2023, and Costco used only $3.1 billion of it over nearly four years. In fiscal 2026 the company bought back 891,000 shares for $847 million — about one-fifteenth of what it just committed to the special dividend.
Read charitably, that is a management team declining to buy its own stock at roughly 46 times forward earnings. It is a defensible position, and arguably an honest one. A board that genuinely believed the shares were cheap would be leaning on the buyback rather than renewing a program it never fully used. Choosing the dividend instead lets shareholders decide for themselves what the stock is worth. Investors who treat the buyback authorization as a vote of confidence in the share price are probably reading it backward.
What December 10th Has to Deliver
The Zacks Consensus Estimate for the November quarter stands at $4.87 per share, up roughly 12% from the $4.34 Costco earned on an adjusted basis a year ago, on revenue of $74.3 billion, an increase of about 10%. For the full fiscal year, the Zacks Consensus Estimate calls for $22.7 in earnings, up 11%, on $329.1 billion in sales, up 8.5%. Fiscal 2028 estimates sit at $24.94 and $352.8 billion.
Image Source: Zacks Investment Research
Those are not heroic numbers, and that is rather the point. Costco (COST - Free Report) has built its reputation on arriving roughly where it said it would, quarter after quarter. The monthly sales cadence heading into the print has been strong: October net sales rose 12.6% to $24.50 billion, with total comparable sales up 11.1%, following 13% sales growth in September and 9.9% in August. Digitally enabled sales climbed 22.5%, continuing a run that has quietly dismantled the idea that warehouse clubs are structurally disadvantaged online.
Read the Comp Number Twice
Here is where we should slow down. That 11.1% headline comparable-sales figure falls to 7.3% once we strip out gasoline price changes and foreign exchange. In the United States, a reported 12.6% becomes 8.1%. The gap is not small, and gas inflation has been doing real work in the headline number for several months now.
An adjusted 7.3% comp is still excellent — few retailers of any size are generating that kind of organic growth — but it is a different number than 11.1%, and it will decelerate when the fuel comparison turns. Management has never pretended otherwise.
The risk is that investors anchored to headline comps are surprised by arithmetic they could have seen coming. One more item worth watching on the call: last year's holiday assortment was constrained by tariffs, and Costco is returning to a more normal seasonal mix this season, which should support the quarter while making the year-over-year comparison flattering.
Bottom Line
Costco's structural advantage is not price, exactly — it is that membership fees pay the bills. Fee income grew 14% in last year's first quarter, and because those dollars carry almost no incremental cost, they fund merchandise margins that competitors cannot match without eroding their own profitability.
Every retailer studying Costco arrives at the same uncomfortable conclusion: you cannot copy the pricing without first copying the revenue model, and the revenue model takes decades to build.
The special dividend is real money and a fair reward for a franchise that has compounded patiently. It is not, however, a thesis. At current multiples, Costco has to keep delivering low-double-digit earnings growth to justify where it trades, and the December 10th report is the first checkpoint on a fiscal year that consensus expects to produce exactly that.
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Image: Bigstock
Costco Hits All-Time High Amid $4 Billion Buyback, Special Dividend
There is something almost quaint about a company that keeps a pile of cash until it becomes conspicuous, then hands it back in one gesture.
Costco has now done it six times in fourteen years. On November 10th, the board declared the largest of them: a $30 per share special cash dividend, roughly $13.3 billion, payable December 4th to shareholders of record on November 24th. The same announcement reauthorized a $4 billion share repurchase program running through November 2030.
Costco reports fiscal first-quarter results after the close on December 10th, which means investors receive the capital return first and the operating evidence second. That sequence is unusual, and it puts a particular weight on what the December print has to say. Shares touched a record high ahead of the upcoming release.
Image Source: StockCharts
A Statement That Doubles the Last One
Scale is the story here. The prior five specials ran $7, $5, $7, $10 and $15 per share, declared in 2012, 2015, 2017, 2020 and 2023, respectively. This one is twice the last, and at $13.3 billion its total exceeds the first four combined. It equates to about twenty quarters of Costco's regular $1.47 dividend, delivered in a single payment.
It is also a genuine drawdown rather than a gesture. Costco closed fiscal 2026 with $20.2 billion in cash and equivalents, up from $14.2 billion a year earlier, and this payout consumes roughly two-thirds of it. Fiscal 2026 operating cash flow was $15.8 billion against $6.4 billion of capital spending, so the check is larger than a full year of free cash flow.
The Buyback Is the Quieter Signal
The repurchase reauthorization deserves more scrutiny than it will get. The program it replaces was also $4 billion, adopted in January 2023, and Costco used only $3.1 billion of it over nearly four years. In fiscal 2026 the company bought back 891,000 shares for $847 million — about one-fifteenth of what it just committed to the special dividend.
Read charitably, that is a management team declining to buy its own stock at roughly 46 times forward earnings. It is a defensible position, and arguably an honest one. A board that genuinely believed the shares were cheap would be leaning on the buyback rather than renewing a program it never fully used. Choosing the dividend instead lets shareholders decide for themselves what the stock is worth. Investors who treat the buyback authorization as a vote of confidence in the share price are probably reading it backward.
What December 10th Has to Deliver
The Zacks Consensus Estimate for the November quarter stands at $4.87 per share, up roughly 12% from the $4.34 Costco earned on an adjusted basis a year ago, on revenue of $74.3 billion, an increase of about 10%. For the full fiscal year, the Zacks Consensus Estimate calls for $22.7 in earnings, up 11%, on $329.1 billion in sales, up 8.5%. Fiscal 2028 estimates sit at $24.94 and $352.8 billion.
Image Source: Zacks Investment Research
Those are not heroic numbers, and that is rather the point. Costco (COST - Free Report) has built its reputation on arriving roughly where it said it would, quarter after quarter. The monthly sales cadence heading into the print has been strong: October net sales rose 12.6% to $24.50 billion, with total comparable sales up 11.1%, following 13% sales growth in September and 9.9% in August. Digitally enabled sales climbed 22.5%, continuing a run that has quietly dismantled the idea that warehouse clubs are structurally disadvantaged online.
Read the Comp Number Twice
Here is where we should slow down. That 11.1% headline comparable-sales figure falls to 7.3% once we strip out gasoline price changes and foreign exchange. In the United States, a reported 12.6% becomes 8.1%. The gap is not small, and gas inflation has been doing real work in the headline number for several months now.
An adjusted 7.3% comp is still excellent — few retailers of any size are generating that kind of organic growth — but it is a different number than 11.1%, and it will decelerate when the fuel comparison turns. Management has never pretended otherwise.
The risk is that investors anchored to headline comps are surprised by arithmetic they could have seen coming. One more item worth watching on the call: last year's holiday assortment was constrained by tariffs, and Costco is returning to a more normal seasonal mix this season, which should support the quarter while making the year-over-year comparison flattering.
Bottom Line
Costco's structural advantage is not price, exactly — it is that membership fees pay the bills. Fee income grew 14% in last year's first quarter, and because those dollars carry almost no incremental cost, they fund merchandise margins that competitors cannot match without eroding their own profitability.
Every retailer studying Costco arrives at the same uncomfortable conclusion: you cannot copy the pricing without first copying the revenue model, and the revenue model takes decades to build.
The special dividend is real money and a fair reward for a franchise that has compounded patiently. It is not, however, a thesis. At current multiples, Costco has to keep delivering low-double-digit earnings growth to justify where it trades, and the December 10th report is the first checkpoint on a fiscal year that consensus expects to produce exactly that.