Costco Announces 13% Dividend Increase, Reflecting Strong Financial Health
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 03 2026
0mins
Source: NASDAQ.COM
- Significant Dividend Increase: Costco has announced a 13% increase in its dividend, aligning with the average annual growth rate of 12% over the past decade, demonstrating the company's ongoing profitability and commitment to shareholder returns.
- Revenue Structure Insight: In the first half of fiscal 2026, Costco generated $136.9 billion in revenue, with membership fees making up less than 2% but contributing nearly $2.7 billion to income, which exceeds half of the company's gross profit, highlighting the profitability potential of its membership model.
- Stable Membership Renewal Rate: Although the global membership renewal rate was 89.7% in Q2 of fiscal 2026, down from 90.5% in the same quarter of 2025, it still indicates customer satisfaction with the Costco shopping experience, reflecting the resilience of its business model.
- Market Valuation Considerations: Costco's price-to-earnings ratio stands at 51x, significantly higher than the retail industry's average of 18x, and with a dividend yield of only 0.6%, investors should carefully assess the risks associated with its high valuation.
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Analyst Views on COST
Wall Street analysts forecast COST stock price to rise
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 995.200
Low
769.00
Averages
1061
High
1205
Current: 995.200
Low
769.00
Averages
1061
High
1205
About COST
Costco Wholesale Corporation (Costco) operates membership warehouses and e-commerce sites that offer a selection of nationally branded and private-label products in a wide range of categories. The Company buys the majority of its merchandise directly from suppliers and route it to cross-docking consolidation points (depots) or directly to its warehouses. It operates 891 warehouses, including 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand and Sweden. It also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia. The Company provides wide selection of merchandise, plus the convenience of specialty departments and exclusive member services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Increased Member Loyalty: The high price sensitivity led many members to use Costco's gas stations for the first time in Q3, which not only boosted sales but is expected to enhance member loyalty in the future.
- Sales Growth Exceeds Expectations: Costco reported a Q3 comparable sales growth of 9.8%, significantly above the consensus estimate of 7.8%, with gas price inflation contributing approximately 2.2% to this growth.
- Competitive Pricing Advantage: By widening price gaps, Costco ensures attractive pricing for members, reflecting the increased share of gas spending in total member expenditures due to rising prices, thereby reinforcing its market position.
See More
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- Price Strategy Reflection: Former CEO Jim Sinegal resisted a 3% price increase across all items, despite executives believing customers would hardly notice, aiming to maintain Costco's low-price image and avoid losing customer trust.
- Stable Renewal Rates: Costco's fiscal 2024 report shows a membership renewal rate exceeding 92% in North America, highlighting an unusually strong customer loyalty amidst rising prices faced by most retailers.
- Unique Profit Model: By capping margins at 14% for national brands and 15% for Kirkland Signature items, Costco relies on annual membership fees to maintain lower prices, which not only reduces costs but also enhances consumer trust.
- Inflation Response Challenges: Although Costco raised membership fees for the first time in 2024 to address inflation pressures, its overall strategy remains focused on maintaining price stability without undermining customer trust, which is particularly crucial in the current economic climate.
See More
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- Citigroup Future Potential: Citigroup has risen 67% over the past 12 months, with BofA analyst Ebrahim Poonawala raising the 12-month price target from $150 to $170, believing the company's proactive approach in AI will further drive stock price increases.
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See More
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- Software Stocks Rebound: ServiceNow jumped about 14% and Datadog surged 10%, indicating a renewed enthusiasm for software as AI demand broadens beyond a few mega-caps, potentially opening new growth avenues for the entire ecosystem.
- Investor Focus on Future: Despite the S&P 500's ninth consecutive week of gains, investors remain cautious, closely monitoring inflation, job data, and consumer sentiment to assess the sustainability of the rally amid elevated oil prices and revised GDP estimates.
See More
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- Market Rally Continues: The S&P 500 posted its ninth consecutive week of gains, increasing over 6% in May despite rising energy and shipping costs, as hopes for a U.S.-Iran ceasefire and Dell's strong performance bolstered investor confidence.
- Software Stocks Rebound: ServiceNow jumped about 14% and Datadog surged 10%, reflecting a resurgence in software stocks driven by renewed AI demand, indicating that the AI ecosystem is gaining traction beyond just a few mega-cap companies.
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