Costco unveils $30 special dividend and $4bn buyback

The $30 per-share payout exceeds the roughly $24 that analysts had expected would be needed to match the yield of the 2024 special dividend, so the surprise is likely to be in the size rather than just the timing. Costco shares have historically strengthened in the days following a special dividend announcement, as investors buy in before the record date. The larger question for valuation centres on balance-sheet strength: a single $13.3 billion payout consumes a big portion of the company's accumulated cash. Over time, the renewed buyback also gives Costco more flexibility to manage its share count.

Earlier

Costco has delivered the special dividend that shareholders had been anticipating, and at $30 a share it is twice the size of the previous one.

Summary

• Costco announced a special cash dividend of $30 per share, totalling approximately $13.3 billion
• Payable on December 4 to shareholders on record as of the close of business on November 24
• A new $4 billion share repurchase programme has been approved, running through November 2030
• It replaces a $4 billion plan from 2023 set to expire in January 2027, under which $3.1 billion had already been repurchased
• The payout is double the $15 special dividend paid in January 2024

Costco Wholesale (COST) has announced a special cash dividend of $30 per share, a one-time distribution valued at roughly $13.3 billion. The company has also authorised a fresh $4 billion share buyback programme, it said in a statement on November 10.

The special dividend will be paid on December 4 to shareholders on record at the close of business on November 24. It comes on top of Costco's regular quarterly dividend.

The new buyback authorisation is valid until November 2030. It supersedes a $4 billion programme adopted in 2023 that was due to expire in January 2027, under which the company had repurchased $3.1 billion of stock. That leaves about $900 million in unused capacity on the old plan as it is retired.

This special dividend is the largest in Costco's history, double the $15 per share it issued in January 2024. The retailer has made such payments every few years since 2012, typically funding them from cash on hand rather than debt, and shareholders had been watching for the next one.

Management had signalled the possibility. Chief Financial Officer Gary Millerchip said earlier this year that given the company's current valuation, a special dividend is usually the most efficient way to return excess cash while retaining the ability to invest in growth. He also noted that with the share price well above its level at the last payout, a larger cash pile would be required to achieve a similar yield. Analysts had calculated that a yield of roughly 2.4%, matching the 2024 dividend, would require around $24 per share, so the $30 figure exceeds that threshold.

Costco's statement did not specify how the dividend or buyback would be funded, and it contained no executive commentary. The company operates 945 warehouses, 653 of them in the United States and Puerto Rico, and runs e-commerce sites in nine countries.

For shareholders, the key date is November 24, when investors must be on the register to qualify. Under standard US settlement, the shares are expected to trade ex-dividend on or around that date. With so much cash being distributed, attention is likely to shift to how quickly Costco rebuilds its balance sheet and whether it uses the renewed buyback more aggressively than the previous one.