Costco (NASDAQ: COST) is known for its bulk-sized retail offerings, saving its members money in the process. The same can't be said about its quarterly dividend checks. Despite lifting its payouts for 22 consecutive years, Costco's stock has delivered heartier gains over that period, yet it yields a pedestrian 0.6% right now.
This is certainly better than no dividend, but it's not the kind of yield that will attract income investors. However, Costco does have a secret weapon in its arsenal. Every few years, the country's leading warehouse club operator declares a special one-time payout.
It's been three years since the chain's last one-time dividend, making another distribution more than just possible later this year. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » If you're a buyer of Costco stock, your goal is capital appreciation and not the regular quarterly distributions. The shares are up 80% over the past three years, soaring 120% over the last five years.
However, the special distributions it has historically declared every couple of years do sweeten the income stream for long-term investors beyond its modest current yield of 0.6%. Here are the last few one-time distributions. The cadence has been somewhat consistent since Costco began rolling out these one-off declarations 14 years ago.
They have come once every two or three years. It's been three years since the last major distribution, so my fellow Costco shareholders and I are likely due for another distribution later this year. Even with Costco shares approaching four figures, the occasional special distributions are material.
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