Costco Wholesale Corporation
) is an intriguing option for investors seeking both growth and
income. This warehouse retailer announced its decision of a
dividend hike, reflecting its plan of utilizing free cash to
enhance shareholders' return, thereby boosting investors'
confidence in the stock.
The Issaquah, WA-based company, raised its quarterly dividend
by 14.5% to 35.5 cents (or $1.42 annually) from 31 cents a share
(or $1.24 annually). The increased dividend will be paid on May
30, 2014, to stockholders of record as of May 16. The dividend
yield based on the new payout and the last closing market price
is approximately 1.2%. In Apr 2013, the company last increased
its quarterly dividend by 12.7% to 31 cents.
Dividend hikes not only enhance shareholder's return but raise
the market value of the stock. Through this strategy, the
companies try to win investors, thereby persuading them to either
buy or hold the scrip instead of selling them.
Investors prefer an income generating stock and a dividend
paying stock is always a preferable option. People looking for
regular income from stocks are most likely to be inclined toward
those companies that have a track record of consistent and
incremental dividend payment.
Other companies that recently increased quarterly dividend
SunTrust Banks, Inc.
). The companies raised their dividends by 8% to $3.29 and 100%
to 20 cents, respectively. Another company,
) recently hiked its dividend by 27% to 35 cents.
Costco continues to be a dominant retail wholesaler based on
the breadth and quality of merchandises it offers. The company's
strategy to sell products at heavily discounted prices has helped
it maintain positive growth amid the beleaguered economic
conditions as budget-conscious customers continue to see it as a
viable option for low-cost necessities.
However, Costco currently holds a Zacks Rank #4 (Sell)
that highlights its negative earnings surprises in the last 4
quarters - 10.3% and 5.9% in the second and first quarters of
fiscal 2014, respectively, while 4.1% and 1.9% in the fourth and
third quarters of fiscal 2013, respectively.
Costco currently operates 652 warehouses, comprising 463
warehouses in the United States and Puerto Rico, 87 in Canada, 33
in Mexico, 25 in the United Kingdom, 19 in Japan, 10 in Taiwan,
10 in Korea and 5 in Australia.
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