From Nasdaq:



Costco Wholesale has recently announced a special $15 per share dividend for its shareholders. This dividend seems substantial, but when considering the stock price and the forward yield, it may not be as impressive. Target, on the other hand, has not announced a special dividend but has consistently raised its dividend every year for over 50 years, with a forward yield that is better than that of Costco. Target’s traditional approach to dividends, use of free cash flow, and overall value in the stock market make it a more reliable and valuable investment compared to Costco, especially with Costco’s special dividends. Costco’s high stock price and price-to-earnings ratio have outpaced its earnings and revenue growth, making it an expensive investment. On the other hand, Target’s recent efforts to overcome inventory management issues and expansion in online ordering and curbside pickup services make it a worthwhile investment for the long term. Ultimately, the author argues that special dividends are overrated, and Costco should focus on continually growing their ordinary dividend and reinvesting money back into the business to support future growth. In conclusion, the author suggests that while investing in Costco may not be the best idea at the current state, Target might be a better investment option for long-term benefits.



Original: Even With Its $15 Special Dividend, Costco Still Won’t Yield as Much as This Dividend King in 2024