Costco vs. McDonald's: A Dividend Comparison
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy COST?
Source: Fool
- Costco Sales Growth: Costco reported a 13% year-over-year increase in net sales for April, reaching approximately $24 billion, and even after excluding gasoline price changes, comparable sales rose 7.8%, indicating strong market demand and customer loyalty.
- Dividend Increase: The board approved a quarterly dividend increase from $1.30 to $1.47 per share in April, marking 22 consecutive years of dividend hikes, and while the yield is only 0.6%, the stable membership income provides robust support for this payout.
- McDonald's Revenue Analysis: McDonald's first-quarter revenue rose 9% to $6.52 billion, but only grew 4% in constant currencies, indicating a growth rate significantly lower than Costco's, despite a 6% increase in net income to $1.98 billion.
- Dividends and Buybacks: McDonald's pays a quarterly dividend of $1.86, annualized to $7.44, yielding 2.6%, and repurchased 1.3 million shares for $393 million in the quarter, demonstrating strong capital return capabilities, although it faces risks from weakening consumer demand.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy COST?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
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: 1012.060
Low
769.00
Averages
1061
High
1205
Current: 1012.060
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.
Costco Reports 13% Sales Growth in April
- Strong Sales Performance: Costco reported net sales of $23.92 billion in April, marking a 13% year-over-year increase, although actual growth was slightly lower due to the Easter calendar shift, demonstrating the company's robust ability to maintain steady sales.
- Comparable Sales Growth: Total comparable sales rose 11.6%, with digital comparable sales climbing 18.8%, indicating a sustained consumer demand for online shopping and further solidifying Costco's competitive position in the retail market.
- Membership Fee Income Growth: Membership fee income increased by 13.6%, with a 7.5% rise after excluding foreign exchange impacts, reflecting the company's confidence in future growth and its ability to continue attracting new members.
- Future Outlook: Despite facing tariff risks and a slight decline in membership renewal rates, the company plans to open 28 new warehouses in fiscal 2026, showcasing its long-term growth potential, and investors may consider starting a small position to capture future gains.
See More
Nike Sued Over Failure to Refund Tariff Costs
- Tariff Refund Lawsuit: Consumers filed a lawsuit against Nike on Friday, accusing the company of failing to refund significant tariff-related costs passed on through higher prices, arguing that Nike should not retain expected refunds.
- Price Increase Impact: Nike raised prices on some footwear by $5 to $10 and apparel by $2 to $10 due to tariffs, imposing additional costs on consumers and potentially damaging the brand's market reputation.
- Legal Liability Dispute: The complaint claims that Nike has made no legally binding commitment to return tariff-related overcharges, raising concerns that the company could profit twice—once from consumers through higher prices and again from the government through tariff refunds.
- Industry Context: Nike's lawsuit parallels similar cases against companies like Costco and EssilorLuxottica, highlighting growing consumer scrutiny regarding corporate transparency and accountability in the wake of tariff policy changes.
See More
Trade Desk Faces Publicis Challenge Amid Earnings Miss
- Publicis Controversy Impact: Trade Desk's Q1 2026 earnings miss led to a 13.11% drop in pre-market trading, primarily due to Publicis's concerns over pricing and transparency, which could result in client losses and significantly impact Q2 and Q3 revenues.
- Margin Pressure: The company targets a full-year adjusted EBITDA margin of 40%, yet reported only 30% in Q1, necessitating substantial revenue growth or aggressive cost control in the second half, with management failing to provide a clear strategy, thus increasing market uncertainty.
- Long-Term Outlook Remains Positive: Despite short-term challenges, Trade Desk's long-term strategies, including open internet principles, retail media, and AI search, remain attractive, with Jeff Green's $150 million stock purchase reflecting confidence in the company's future.
- Cautious Market Reaction: Although Publicis's audit found no issues, the market's response to Trade Desk remains cautious, with heightened investor concerns about future profitability and market share, indicating a strong focus on the company's near-term performance.
See More
Costco vs. McDonald's: A Dividend Comparison
- Costco Sales Growth: Costco reported a 13% year-over-year increase in net sales for April, reaching approximately $24 billion, and even after excluding gasoline price changes, comparable sales rose 7.8%, indicating strong market demand and customer loyalty.
- Dividend Increase: The board approved a quarterly dividend increase from $1.30 to $1.47 per share in April, marking 22 consecutive years of dividend hikes, and while the yield is only 0.6%, the stable membership income provides robust support for this payout.
- McDonald's Revenue Analysis: McDonald's first-quarter revenue rose 9% to $6.52 billion, but only grew 4% in constant currencies, indicating a growth rate significantly lower than Costco's, despite a 6% increase in net income to $1.98 billion.
- Dividends and Buybacks: McDonald's pays a quarterly dividend of $1.86, annualized to $7.44, yielding 2.6%, and repurchased 1.3 million shares for $393 million in the quarter, demonstrating strong capital return capabilities, although it faces risks from weakening consumer demand.
See More
Costco Continues to Win the Inflation Battle
- Strong Sales Growth: Costco reported a sales increase of 13% to $23.92 billion for April, reflecting continued consumer preference for value offerings, particularly amid rising gas prices, which solidifies its market position.
- Membership Renewal Concerns: Despite strong sales, declining membership renewal rates have captured market attention, with updates expected in the fiscal Q3 report on May 28, indicating that online sign-ups renew at lower rates than in-store shoppers, potentially impacting future revenue.
- Increased Traffic: Total traffic in Costco warehouses rose 4.2% year-over-year, with U.S. traffic up 3.8%, and average transaction values increased by 7.1%, demonstrating strong consumer demand for discounted products, which drives overall sales growth.
- Special Dividend Potential: Analysts suggest Costco may issue a special dividend in the future, given its cash reserves exceeding $17 billion, with a historical pattern of issuing special dividends every 2.5 to 3 years, further attracting investor interest in its long-term value.
See More
Clorox Boosts Dividend for 48th Year, Yield Hits Multi-Decade High
- Dividend Growth Commitment: Clorox successfully raised its dividend for the 48th consecutive year last July, and despite market challenges, it is on track to achieve the milestone of becoming a Dividend King by 2027, demonstrating the company's long-term commitment to shareholders.
- Market Share Pressure: Although private labels like Costco's Kirkland Signature and Walmart's Great Value are gaining traction, Clorox's CEO noted that private label market share remained flat in the quarter, indicating that consumers still prefer high-quality brands, which provides Clorox with competitive opportunities.
- Sales Forecast Downgrade: Clorox now forecasts a 9% decline in organic sales for fiscal 2026, down from the previous guidance of 5% to 9%, reflecting the operational challenges faced amid intense competition and promotional pressures.
- ERP System Upgrade: Clorox completed a $580 million ERP system upgrade, which, despite being a complex transition affecting the supply chain, is expected to enhance overall operational efficiency and lay the groundwork for future business growth.
See More
Costco Reports 13% Sales Growth in April
- Strong Sales Performance: Costco reported net sales of $23.92 billion in April, marking a 13% year-over-year increase, although actual growth was slightly lower due to the Easter calendar shift, demonstrating the company's robust ability to maintain steady sales.
- Comparable Sales Growth: Total comparable sales rose 11.6%, with digital comparable sales climbing 18.8%, indicating a sustained consumer demand for online shopping and further solidifying Costco's competitive position in the retail market.
- Membership Fee Income Growth: Membership fee income increased by 13.6%, with a 7.5% rise after excluding foreign exchange impacts, reflecting the company's confidence in future growth and its ability to continue attracting new members.
- Future Outlook: Despite facing tariff risks and a slight decline in membership renewal rates, the company plans to open 28 new warehouses in fiscal 2026, showcasing its long-term growth potential, and investors may consider starting a small position to capture future gains.
See More
Nike Sued Over Failure to Refund Tariff Costs
- Tariff Refund Lawsuit: Consumers filed a lawsuit against Nike on Friday, accusing the company of failing to refund significant tariff-related costs passed on through higher prices, arguing that Nike should not retain expected refunds.
- Price Increase Impact: Nike raised prices on some footwear by $5 to $10 and apparel by $2 to $10 due to tariffs, imposing additional costs on consumers and potentially damaging the brand's market reputation.
- Legal Liability Dispute: The complaint claims that Nike has made no legally binding commitment to return tariff-related overcharges, raising concerns that the company could profit twice—once from consumers through higher prices and again from the government through tariff refunds.
- Industry Context: Nike's lawsuit parallels similar cases against companies like Costco and EssilorLuxottica, highlighting growing consumer scrutiny regarding corporate transparency and accountability in the wake of tariff policy changes.
See More
Trade Desk Faces Publicis Challenge Amid Earnings Miss
- Publicis Controversy Impact: Trade Desk's Q1 2026 earnings miss led to a 13.11% drop in pre-market trading, primarily due to Publicis's concerns over pricing and transparency, which could result in client losses and significantly impact Q2 and Q3 revenues.
- Margin Pressure: The company targets a full-year adjusted EBITDA margin of 40%, yet reported only 30% in Q1, necessitating substantial revenue growth or aggressive cost control in the second half, with management failing to provide a clear strategy, thus increasing market uncertainty.
- Long-Term Outlook Remains Positive: Despite short-term challenges, Trade Desk's long-term strategies, including open internet principles, retail media, and AI search, remain attractive, with Jeff Green's $150 million stock purchase reflecting confidence in the company's future.
- Cautious Market Reaction: Although Publicis's audit found no issues, the market's response to Trade Desk remains cautious, with heightened investor concerns about future profitability and market share, indicating a strong focus on the company's near-term performance.
See More
Costco vs. McDonald's: A Dividend Comparison
- Costco Sales Growth: Costco reported a 13% year-over-year increase in net sales for April, reaching approximately $24 billion, and even after excluding gasoline price changes, comparable sales rose 7.8%, indicating strong market demand and customer loyalty.
- Dividend Increase: The board approved a quarterly dividend increase from $1.30 to $1.47 per share in April, marking 22 consecutive years of dividend hikes, and while the yield is only 0.6%, the stable membership income provides robust support for this payout.
- McDonald's Revenue Analysis: McDonald's first-quarter revenue rose 9% to $6.52 billion, but only grew 4% in constant currencies, indicating a growth rate significantly lower than Costco's, despite a 6% increase in net income to $1.98 billion.
- Dividends and Buybacks: McDonald's pays a quarterly dividend of $1.86, annualized to $7.44, yielding 2.6%, and repurchased 1.3 million shares for $393 million in the quarter, demonstrating strong capital return capabilities, although it faces risks from weakening consumer demand.
See More
Costco Continues to Win the Inflation Battle
- Strong Sales Growth: Costco reported a sales increase of 13% to $23.92 billion for April, reflecting continued consumer preference for value offerings, particularly amid rising gas prices, which solidifies its market position.
- Membership Renewal Concerns: Despite strong sales, declining membership renewal rates have captured market attention, with updates expected in the fiscal Q3 report on May 28, indicating that online sign-ups renew at lower rates than in-store shoppers, potentially impacting future revenue.
- Increased Traffic: Total traffic in Costco warehouses rose 4.2% year-over-year, with U.S. traffic up 3.8%, and average transaction values increased by 7.1%, demonstrating strong consumer demand for discounted products, which drives overall sales growth.
- Special Dividend Potential: Analysts suggest Costco may issue a special dividend in the future, given its cash reserves exceeding $17 billion, with a historical pattern of issuing special dividends every 2.5 to 3 years, further attracting investor interest in its long-term value.
See More
Clorox Boosts Dividend for 48th Year, Yield Hits Multi-Decade High
- Dividend Growth Commitment: Clorox successfully raised its dividend for the 48th consecutive year last July, and despite market challenges, it is on track to achieve the milestone of becoming a Dividend King by 2027, demonstrating the company's long-term commitment to shareholders.
- Market Share Pressure: Although private labels like Costco's Kirkland Signature and Walmart's Great Value are gaining traction, Clorox's CEO noted that private label market share remained flat in the quarter, indicating that consumers still prefer high-quality brands, which provides Clorox with competitive opportunities.
- Sales Forecast Downgrade: Clorox now forecasts a 9% decline in organic sales for fiscal 2026, down from the previous guidance of 5% to 9%, reflecting the operational challenges faced amid intense competition and promotional pressures.
- ERP System Upgrade: Clorox completed a $580 million ERP system upgrade, which, despite being a complex transition affecting the supply chain, is expected to enhance overall operational efficiency and lay the groundwork for future business growth.
See More
