On Monday, November 16th, 2020, the Board of Directors of Costco Wholesale Corporation announced a special cash dividend of $10.00 per share.
This dividend will be payable December 11th, 2020 to shareholders as of record at the close of business on December 2nd 2020.
What are Special Dividends?
Special dividends are payments that can be made by any company, even if it doesn’t pay a regular dividend. Typically, companies pay a special dividend in addition to the dividends they pay on a regular basis.
Some companies pay this dividend due to a large asset sale or a windfall of some nature however, this was not the case for Costco.
I think the statement made by Costco’s Chief Financial Officer, Richard Galanti, summed it up well:
“This special dividend, our fourth in eight years, is our latest step to reward shareholders. Our strong balance sheet allows us to pay this dividend, while preserving financial and operational flexibility to continue to grow our business globally. Costco will continue to be in a financial position to take care of our employees, enhance the value of Costco memberships, and create shareholder value over the long term.”
Costco is paying the special dividend for all the right reasons that I look for when investing in a company: they are growing, have strong financial standings, and they reward their shareholders.
Costco has paid special dividends before and rumours had been circulating it would pay one this year however, there really is no way to predict whether a company will pay a special dividend.
This special dividend is another example of how dividend paying companies are a great way to enhance your income.
Costco paid its first dividend of $0.10 per share on May 31st, 2004. It has consistently grown its dividend for the last 16 years and is currently paying a quarterly dividend of $0.70 a share.
"How will you replace your current income in retirement?" - Jim Seyers