Costco is giving shareholders a big, early holiday gift. How to make sure you get it
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 few dollars shy of its all-time high of $1,096 on May 19 before paring some of those gains. COST YTD mountain Costco YTD Earlier this month, after strong October sales, we documented the rise in Costco stock as the market has recently been rotating out of the AI trade and into consumer staple stocks like Costco and other defensive names. Quarter-to-date, Costco stock has soared more than 18%, bringing its year-to-date gains to 25%. For comparison, the S & P 500 is up 11.5% in 2026. If recent history is any guide, the five other special dividends issued by Costco, dating back to November 2012, have been good for an average stock gain of 1.5% for the roughly two-week period from the announcement day to the record date. The one announced on Dec. 14, 2023, was good for a 5% pop in the stock by the record date. That was the best stock performance of the bunch. On the flip side, the one announced on Nov. 28, 2012 resulted in a 4.9% decline in the stock by the record date. That was the worst. To be sure, those stock moves are a function of only looking at the charts, without taking into account other factors that may or may not have influenced the share prices during those time periods. Deutsche Bank also sees Costco’s latest payout as another reason to justify the stock’s high price-to-earnings ratio of 46.4 times next 12 months’ earnings estimates. The S & P 500’s forward P/E is less than half that. “While special dividends remain discretionary and do not change our underlying earnings outlook, we believe the increasing size of these distributions … provides another tangible proof point supporting Costco’s premium valuation,” the analysts wrote Tuesday evening. As veteran investors in Costco, we are not strangers to premium valuation. But time and time again, the stock has proven it is worth it, handily outperforming the S & P 500 over the long haul. Shares more than doubled over five years; soared more than 600% over the past decade; and skyrocketed over 1,930% over the past 20 years. Costco’s appeal goes beyond its shareholder rewards. Jim praised the company’s efforts to keep prices down for consumers battling the elevated costs of everyday items from groceries to gasoline. October’s hotter-than-expected consumer price index Tuesday served as a reminder of those pressures. “It’s all pricing. It’s all pricing. Remember, they want pricing low because they’re making all the money on the [membership] card,” Jim said. “This is about how you have a plan to help America save money, and it works.” One way Costco has managed to keep prices competitive is through its popular Kirkland Signature private-label brand. Jim pointed to Costco’s Kirkland Vodka as an example of how the company has challenged established brands like Tito’s by offering a similar product at a better price. As of Wednesday, a check of Costco’s website with a New York City zip code showed that a 1.75-liter bottle of Tito’s costs around $30, compared with a little over $13 for the Kirkland brand. The other side of what makes Costco stellar, as Jim has regularly pointed out, is Costco’s membership-based business model. Instead of relying solely on profits from individual product sales, Costco generates a significant portion of its income through annual membership fees. While reporting sales on a monthly basis, which keeps the mystery out of the top-line number, Costco only reports its membership numbers quarterly. Membership trends, which have shown slowing growth and wobbly renewal rates, will be the big watch item when Costco reports the first quarter of its new 2027 fiscal year, or the November quarter. The membership metrics in the company’s fiscal fourth quarter ended in August were OK but nothing to write home about. (Jim Cramer’s Charitable Trust is long COST. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
