How Much Will Costco Pay Out in Dividends in 2025?

Many investors don't think about Costco Wholesale's (NASDAQ: COST) dividends. It's long been a growth stock that has appreciated over 585% during the last 10 years (ended Nov. 7). During this span, the S&P 500 gained about 195%.

However, the company has been making payouts for more than 20 years, and the board of directors has a history of increasing them annually. Hence, it's important to consider how much it will shell out next year, and whether it can afford the payments.

Image source: Getty Images.

Doing the math

Costco declared $8.6 billion in dividends during its latest fiscal year, which ended on Sept. 1. However, this included an outsized $6.7 billion special dividend ($15 per share) that it paid in January. Typically, Costco pays special dividends every few years, so that's not likely to repeat next year.

As of Oct. 1, Costco had about 443.1 million shares. It currently pays a quarterly dividend of $1.16 a share. Multiplying these two factors equals about $2.1 billion. However, since the board of directors has a history of increasing dividends in May, that figure will undoubtedly be higher.

Last year, Costco increased the payment by 13.7%. Assuming a 10% raise, the new quarterly payout would grow to $1.28. Based on this, the company's payouts would total about $2.2 billion.

Costco generates plenty of free cash flow (FCF) to cover these payments. Last year's FCF was $6.6 billion.

While you can certainly find stocks with a higher dividend yield than Costco's 0.5%, it's important to remember that this is only a small component of your potential total return. Dividend-seeking investors can also await the large special dividend that Costco may again pay down the road.

Should you invest $1,000 in Costco Wholesale right now?

Before you buy stock in Costco Wholesale, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $908,737!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of November 11, 2024

Lawrence Rothman, CFA has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.