Costco Hikes Dividend - Analyst Blog

By
A A A

Costco Wholesale Corporation ( COST ) 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 include Apple Inc. ( AAPL ) and SunTrust Banks, Inc. ( STI ). The companies raised their dividends by 8% to $3.29 and 100% to 20 cents, respectively. Another company, MetLife, Inc. ( MET ) 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.



APPLE INC (AAPL): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

METLIFE INC (MET): Free Stock Analysis Report

SUNTRUST BKS (STI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , COST , MET , STI

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

85,117,424
  • $6.78 ▲ 11.88%
77,261,676
  • $17.53 ▲ 1.56%
61,066,548
  • $6.90 ▲ 2.99%
56,847,440
  • $112.65 ▲ 2.96%
52,788,366
  • $7.78 ▲ 1.83%
50,761,400
  • $25.14 ▲ 2.91%
47,781,237
  • $45.35 ▲ 10.18%
45,664,909
  • $7.17 ▲ 2.14%
As of 12/18/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com