Costco – known for its membership-based business model and massive warehouse stores – has not only redefined retail but has also consistently demonstrated robust financial performance, making it a beacon for investors seeking stability and growth. As a result, there is a myriad reason why Costco’s stock is considered by many as a ‘stock to own forever.’
From its unwavering commitment to customer satisfaction and employee welfare to its strategic growth initiatives and resilient business model, Costco delivers on nearly every front. Whether you’re a seasoned investor or new to the stock market, understanding the unique position Costco holds in the retail sector and its potential for sustained long-term growth could be pivotal in making informed investment decisions. Join us as we unpack the compelling narrative of Costco’s stock and why it might just be the perpetual cornerstone of your investment portfolio.
Costco Stock Is a Dividend Growth Stock
Costco (COST) is known for rewarding its shareholders with solid dividends, allowing them to earn more from their investments. Over time, the amount earned as dividends has also climbed dramatically. At the beginning of 2014, dividends were hitting $0.31 per share, but as of the start of 2024, dividends were sitting at $1.02 per share. That’s an increase of approximately 230 percent.
Plus, Costco occasionally pays out special dividends, giving shareholders an unexpected boost. For example, in December 2023, there was a payout of $15.00 per share, and that was in addition to the regular quarterly dividends. A similar (though smaller) special dividend was paid in December 2020, giving investors an additional $10.00. May 2017 had a $7.00 special dividend, and there were many others prior to that date.
Ultimately, Costco had a revenue figure of $245.65 billion for the 12-month period ending November 30, 2023. That represented a 6.33 percent year-over-year increase. Generally, shareholders aren’t surprised by Costco’s success, and that’s why COST is considered a dividend growth stock worth holding.
Costco Stock Projections
While no one can know the future of a company’s financial picture beyond a shadow of a doubt, Costco’s longevity and reliable business model help experts more effectively anticipate its potential performance. Now, as is true with essentially every company, Costco has had its ups and downs.
For example, like for many retailers, the pandemic created challenges for Costco. Lockdowns limited shoppers’ access to physical stores, and fears regarding possible infection caused some customers to steer clear of brick-and-mortar locations, including Costco Warehouse stores.
As of February 24, 2024, Costco’s stock price sat at $737.93, representing a high point for not just the past 12 months but also the company’s entire history on the market. While some may assume that means buying COST now isn’t a great move, that isn’t necessarily the case.
Costco is seeing sales rise consistently, and it’s keeping pace with Walmart – the retail giant often seen as Costco’s biggest competitor – in that department. Costco’s e-commerce sector is also rebounding. Plus, the company is increasing its membership prices (something that occurs approximately every 5 to 6 years), creating avenues for additional revenue.
Essentially, COST is still poised for growth, even with the stock’s price reaching new heights. Plus, Costco’s stability means it essentially always falls in experts’ ‘buy’ or ‘hold’ categories, which is another positive sign.
Costco Stock Is Safe
While it’s true that all stock comes with at least some degree of risk, Costco stock is generally considered a pretty safe bet. The company has an excellent history of financial stability and an incredibly loyal customer base, both of which play in shareholders’ favor.
Currently, there are 875 Costco Warehouse stores, and the retailer has a presence in 47 states, Puerto Rico, Canada, and many other countries. Plus, Costco.com gives customers another convenient way to shop. As a result, Costco is generally accessible – even with the membership requirement – and fans of the store continue to flock to it for bargains. For investors, that creates opportunities for growth not just today but well into the future.
Do you own Costco stock? If so, do you think you’ll keep it forever? If you don’t have any Costco stock, is there a specific reason you’re steering away from this investment option? Share your thoughts in the comments below.
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