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Does Costco's 13% Dividend Hike Make the Stock a Buy Right Now?
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Key Takeaways
Costco raised its quarterly dividend 13.1% to $1.47, payable on May 15, 2026.
COST reported $17,383M cash; operating cash flow rose to $7,684M for the 24 weeks ended Feb. 15, 2026.
Costco trades at a 45.64 forward P/E, above peers, and sits below its 50-day moving average.
Costco Wholesale Corporation (COST - Free Report) just gave shareholders a reason to smile, announcing a 13.1% increase in its quarterly dividend. The move reinforces its appeal among investors looking for both steady income and consistent growth. Based in Issaquah, WA, Costco’s long-standing track record of dividend payouts backed by healthy fundamentals provides a hedge against any odd swings in the stock market.
The dividend boost, from $1.30 to $1.47 per share, underscores Costco’s robust cash flow and disciplined financial management. It also signals management’s confidence in the company’s long-term earnings trajectory. The quarterly dividend is payable on May 15, 2026, to stockholders of record at the close of business on May 1, 2026. The revision lifts the annualized payout to $5.88 per share.
We believe that such strategic steps not only drive shareholder value but also raise the market value of the stock. Through these dividend increases, companies persuade investors to either buy or hold the stock.
For investors assessing whether this move makes the stock a buy right now, the spotlight falls on Costco’s capital return approach. The double-digit hike signals confidence in the company’s ability to continue rewarding shareholders. The dividend increase indicates that management views its balance sheet as robust enough to sustain higher outflows despite broader economic shifts.
Costco ended the second quarter of fiscal 2026 with $17,383 million in cash and cash equivalents. Operating cash flow increased meaningfully to $7,684 million for the 24 weeks ended Feb. 15, 2026, up from $6,008 million in the year-ago period.
Costco’s Strong Fundamentals Support Long-Term Stability
Costco’s core strength lies in its membership-driven model, which provides a dependable and recurring revenue stream. The annual fee structure supports income stability while reinforcing a compelling value proposition for customers. High renewal rates reflect strong loyalty and sustained engagement, suggesting that members continue to see clear benefits in the offering.
The company’s value-focused merchandising strategy further strengthens its competitive positioning. By consistently offering quality products at compelling prices, Costco drives repeat visits and reinforces customer trust. Its limited yet carefully curated assortment ensures efficiency while keeping the shopping experience fresh and engaging. The growing presence of its private label, Kirkland Signature, adds another layer of differentiation by combining perceived premium quality with attractive pricing, supporting both loyalty and margin stability.
Costco continues to enhance its business through measured expansion and targeted investments in technology. Its disciplined approach to opening new warehouses allows it to grow without compromising productivity or returns. At the same time, digital initiatives are improving convenience and operational efficiency, supporting a seamless shopping experience across channels. Together, these elements position Costco to sustain steady growth while maintaining the consistency that defines its business model.
Consensus Estimates for Costco See a Positive Shift
The Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 30 days, the consensus estimate has risen by 3 cents to $20.32 for the current fiscal and by 5 cents to $22.33 for the next fiscal. These estimates indicate year-over-year growth rates of 13% and 9.9%, respectively.
Image Source: Zacks Investment Research
Costco Stock Performance
Costco stock closed at $984.75 yesterday, positioning it 7.7% below its 52-week high of $1,067.08, reached on June 3, 2025. Shares of Costco have risen 14.2% year to date, outpacing the industry's growth of 10.7%.
Image Source: Zacks Investment Research
Does Costco Tick the Boxes for Value Investing?
Costco is trading at a significant premium to its industry peers. COST's forward 12-month price-to-earnings ratio stands at 45.64, higher than the industry’s ratio of 32.32 and the S&P 500's 21.75. However, the stock is trading below its median P/E level of 47.22, observed over the past year.
Image Source: Zacks Investment Research
Costco Trades Below 50-Day Moving Average
The stock is trading below its 50-day moving average, potentially reflecting investor caution or a temporary pause in momentum.
Image Source: Zacks Investment Research
How to Play Costco Stock Post Dividend Hike?
Costco’s dividend hike reinforces its reputation for steady capital returns and signals underlying financial strength, but it does not, by itself, make a compelling case to aggressively buy the stock at this moment. The increase is best viewed as a continuation of a consistent shareholder-friendly approach rather than a turning point that materially alters the investment case. For existing investors, the development supports holding the stock, as it adds confidence in income visibility and management discipline. For potential investors, the dividend move alone may not warrant immediate entry, and a more balanced approach would be to wait for a more favorable setup or additional catalysts before initiating a position.
Costco is not the only retailer underscoring confidence through higher shareholder payouts, with other companies in the space also announcing dividend increases recently.
Two Other Retailers That Recently Raised Dividends
Albertsons Companies, Inc. (ACI - Free Report) announced an increased cash dividend for the first quarter of fiscal 2026, declaring 17 cents a share and lifting its annualized dividend to 68 cents a share. Albertsons Companies will pay the quarterly dividend on May 8, 2026 to stockholders of record at the close of business on April 24, 2026. Albertsons Companies said the raise reflects confidence in its business strength, solid free cash flow generation and disciplined capital allocation while marking steady dividend growth from 40 cents annually since its June 2020 IPO.
The TJX Companies, Inc. (TJX - Free Report) announced that its board of directors has approved a 13% increase in the quarterly dividend to 48 cents a share, payable on June 4, 2026, to shareholders of record on May 14, 2026. The TJX Companies said that the move marks its 29th dividend increase in the past 30 years, with dividend growth compounding at 20% annually over that period. The TJX Companies also reaffirmed plans for $2.50 billion to $2.75 billion in share repurchases for fiscal 2027, reflecting confidence in sales growth, profitability and cash flow.
While Albertsons Companies holds a Zacks Rank #4 (Sell), TJX carries a Zacks Rank #3.
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Does Costco's 13% Dividend Hike Make the Stock a Buy Right Now?
Key Takeaways
Costco Wholesale Corporation (COST - Free Report) just gave shareholders a reason to smile, announcing a 13.1% increase in its quarterly dividend. The move reinforces its appeal among investors looking for both steady income and consistent growth. Based in Issaquah, WA, Costco’s long-standing track record of dividend payouts backed by healthy fundamentals provides a hedge against any odd swings in the stock market.
The dividend boost, from $1.30 to $1.47 per share, underscores Costco’s robust cash flow and disciplined financial management. It also signals management’s confidence in the company’s long-term earnings trajectory. The quarterly dividend is payable on May 15, 2026, to stockholders of record at the close of business on May 1, 2026. The revision lifts the annualized payout to $5.88 per share.
We believe that such strategic steps not only drive shareholder value but also raise the market value of the stock. Through these dividend increases, companies persuade investors to either buy or hold the stock.
For investors assessing whether this move makes the stock a buy right now, the spotlight falls on Costco’s capital return approach. The double-digit hike signals confidence in the company’s ability to continue rewarding shareholders. The dividend increase indicates that management views its balance sheet as robust enough to sustain higher outflows despite broader economic shifts.
Costco ended the second quarter of fiscal 2026 with $17,383 million in cash and cash equivalents. Operating cash flow increased meaningfully to $7,684 million for the 24 weeks ended Feb. 15, 2026, up from $6,008 million in the year-ago period.
Costco’s Strong Fundamentals Support Long-Term Stability
Costco’s core strength lies in its membership-driven model, which provides a dependable and recurring revenue stream. The annual fee structure supports income stability while reinforcing a compelling value proposition for customers. High renewal rates reflect strong loyalty and sustained engagement, suggesting that members continue to see clear benefits in the offering.
The company’s value-focused merchandising strategy further strengthens its competitive positioning. By consistently offering quality products at compelling prices, Costco drives repeat visits and reinforces customer trust. Its limited yet carefully curated assortment ensures efficiency while keeping the shopping experience fresh and engaging. The growing presence of its private label, Kirkland Signature, adds another layer of differentiation by combining perceived premium quality with attractive pricing, supporting both loyalty and margin stability.
Costco continues to enhance its business through measured expansion and targeted investments in technology. Its disciplined approach to opening new warehouses allows it to grow without compromising productivity or returns. At the same time, digital initiatives are improving convenience and operational efficiency, supporting a seamless shopping experience across channels. Together, these elements position Costco to sustain steady growth while maintaining the consistency that defines its business model.
Consensus Estimates for Costco See a Positive Shift
The Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 30 days, the consensus estimate has risen by 3 cents to $20.32 for the current fiscal and by 5 cents to $22.33 for the next fiscal. These estimates indicate year-over-year growth rates of 13% and 9.9%, respectively.
Image Source: Zacks Investment Research
Costco Stock Performance
Costco stock closed at $984.75 yesterday, positioning it 7.7% below its 52-week high of $1,067.08, reached on June 3, 2025. Shares of Costco have risen 14.2% year to date, outpacing the industry's growth of 10.7%.
Image Source: Zacks Investment Research
Does Costco Tick the Boxes for Value Investing?
Costco is trading at a significant premium to its industry peers. COST's forward 12-month price-to-earnings ratio stands at 45.64, higher than the industry’s ratio of 32.32 and the S&P 500's 21.75. However, the stock is trading below its median P/E level of 47.22, observed over the past year.
Image Source: Zacks Investment Research
Costco Trades Below 50-Day Moving Average
The stock is trading below its 50-day moving average, potentially reflecting investor caution or a temporary pause in momentum.
Image Source: Zacks Investment Research
How to Play Costco Stock Post Dividend Hike?
Costco’s dividend hike reinforces its reputation for steady capital returns and signals underlying financial strength, but it does not, by itself, make a compelling case to aggressively buy the stock at this moment. The increase is best viewed as a continuation of a consistent shareholder-friendly approach rather than a turning point that materially alters the investment case. For existing investors, the development supports holding the stock, as it adds confidence in income visibility and management discipline. For potential investors, the dividend move alone may not warrant immediate entry, and a more balanced approach would be to wait for a more favorable setup or additional catalysts before initiating a position.
Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Costco is not the only retailer underscoring confidence through higher shareholder payouts, with other companies in the space also announcing dividend increases recently.
Two Other Retailers That Recently Raised Dividends
Albertsons Companies, Inc. (ACI - Free Report) announced an increased cash dividend for the first quarter of fiscal 2026, declaring 17 cents a share and lifting its annualized dividend to 68 cents a share. Albertsons Companies will pay the quarterly dividend on May 8, 2026 to stockholders of record at the close of business on April 24, 2026. Albertsons Companies said the raise reflects confidence in its business strength, solid free cash flow generation and disciplined capital allocation while marking steady dividend growth from 40 cents annually since its June 2020 IPO.
The TJX Companies, Inc. (TJX - Free Report) announced that its board of directors has approved a 13% increase in the quarterly dividend to 48 cents a share, payable on June 4, 2026, to shareholders of record on May 14, 2026. The TJX Companies said that the move marks its 29th dividend increase in the past 30 years, with dividend growth compounding at 20% annually over that period. The TJX Companies also reaffirmed plans for $2.50 billion to $2.75 billion in share repurchases for fiscal 2027, reflecting confidence in sales growth, profitability and cash flow.
While Albertsons Companies holds a Zacks Rank #4 (Sell), TJX carries a Zacks Rank #3.