Costco is rewarding shareholders with a big payout ahead of the holidays, and it's not too late to get in on the action. For the sixth time in company history, the retailer is offering a special dividend. To get the $30-a-share payout, announced Tuesday evening , investors must be shareholders of record by the close of business on Nov. 24. (Typically, that means you need to own the stock one business day prior.) It will be payable on Dec. 4. Costco also announced a $4 billion stock buyback plan, which is another way to return capital to shareholders because fewer shares outstanding means a higher ownership percentage in the company without having to purchase more stock. Jim Cramer praised the moves. On "Mad Money" after the announcement, he said, "Shame on those of us who, for a moment, thought maybe Costco was overvalued." He added, "Glad that my Charitable Trust stuck with it. It's a buy." Before the opening bell, Jim said the stock should soon go back to record highs. It almost did Wednesday morning — rallying to a…
Costco is giving shareholders a big, early holiday gift. How to make sure you get it
In short
Costco declared its sixth special dividend in corporate history alongside an authorized $4 billion share buyback program. Eligible investors must be registered shareholders by the close of business on Nov. 24 to receive the cash payment on Dec. 4. Deutsche Bank analysts noted that these expanding capital returns help underpin Costco's valuation of 46.4 times next 12 months' earnings estimates. The company continues to lean on membership fees over retail markups to safeguard profitability while discounting Kirkland Signature items.
Key points
- The retailer relies heavily on recurring annual membership fees rather than wide product…: The retailer relies heavily on recurring annual membership fees rather than wide product margins to generate the majority of its profits.
- Previous special dividend announcements from the company have yielded an average share pr…: Previous special dividend announcements from the company have yielded an average share price gain of 1.5% ahead of the record date.
- Substantial capital return initiatives help support Costco's premium valuation multiple o…: Substantial capital return initiatives help support Costco's premium valuation multiple of 46.4 times forward earnings estimates.