Costco does pay dividends, but only to people who own its stock

Costco Wholesale Corporation pays dividends to shareholders — people and institutions that own shares of the company's stock. The company has paid dividends every year since 1983, and it has increased its dividend payout multiple times over the past decade. However, you do not receive a dividend simply by having a Costco membership card. You must own actual shares of Costco stock, either directly or through a retirement account or mutual fund.

Costco's dividend is paid quarterly, meaning four times per year. The amount per share changes based on the company's profitability and the board's decision about how much profit to return to shareholders versus reinvest in the business. If you own 100 shares and the quarterly dividend is $0.90 per share, you would receive $90 that quarter.

Key Takeaways

  • Costco shareholders receive quarterly dividend payments, but membership in the warehouse does not make you a shareholder.
  • The dividend amount per share varies each quarter and has generally increased over time, though the company does not may provide future increases.
  • You can own Costco stock through a brokerage account, retirement account like a 401(k) or IRA, or through a mutual fund or exchange-traded fund.
  • Dividend payments are taxable income in the year you receive them, and the tax rate depends on whether the dividend is may have access to or nonqualified.

How Costco's dividend payment schedule works

Costco pays its dividend four times per year on a set schedule. The company announces the dividend amount and payment date through a press release, which is posted on its investor relations website. Shareholders of record on a specific date — called the record date — receive that quarter's payment.

If you own the stock on the record date, you will receive the dividend even if you sell the shares the next day. If you buy the stock after the record date, you will not receive that quarter's dividend; you will start receiving dividends the following quarter. The actual payment arrives in your brokerage account a few days after the payment date listed in the announcement.

The dividend amount has grown over time. In 2014, Costco paid roughly $0.36 per share per quarter. By 2024, that amount had increased to around $1.00 per share per quarter, though the exact amount varies. The company does not promise that dividends will increase every year, and the board can reduce or suspend dividends if business conditions change.

The difference between Costco membership and stock ownership

A Costco membership gives you the right to shop at the warehouse and buy products at member prices. It does not give you any ownership stake in the company or any claim to dividends. Membership fees go to Costco as revenue, but they do not make you a shareholder.

To become a shareholder and receive dividends, you must purchase shares of Costco stock through a brokerage firm, a retirement account, or an investment app. You can buy as few as one share, though most brokerages have no minimum purchase amount. Once you own shares and they are held in your name on the record date, you are may have access to to that quarter's dividend payment.

Ways to own Costco stock and receive dividends

The most direct way is to open a brokerage account with a firm like Fidelity, Charles Schwab, E-Trade, or others, and buy Costco shares. You can also own Costco stock indirectly through a retirement account — a 401(k) plan at work, an IRA, or a Roth IRA — if the plan or account holds Costco shares or a fund that includes them. Many employer 401(k) plans offer mutual funds or target-date funds that hold Costco stock.

Another route is to buy shares through a mutual fund or exchange-traded fund (ETF) that holds Costco as part of its portfolio. These funds own many stocks, including Costco, and they pass dividends through to you. The dividend you receive from the fund reflects your share of all the dividends the fund collects from its holdings, not just Costco.

Some people also use dividend reinvestment plans (DRIPs), which automatically use your dividend payment to buy more shares of the stock instead of sending you cash. This can be a way to compound your investment over time, though it does not reduce the taxes you owe on the dividend.

Tax treatment of Costco dividends

Dividends from Costco are taxable income. The tax you owe depends on whether the dividend is may have access to or nonqualified. Costco's regular quarterly dividend is a may have access to dividend, which means it is taxed at the long-term capital gains rate — typically lower than your ordinary income tax rate. To receive the may have access to rate, you must have owned the stock for at least 60 days around the dividend payment date.

If you own Costco stock in a tax-advantaged retirement account like a 401(k) or traditional IRA, you do not pay taxes on the dividend when you receive it. You pay taxes later when you withdraw money from the account. In a Roth IRA or Roth 401(k), may have access to dividends are not taxed at all when you withdraw them in retirement, as long as you follow the account rules.

Your brokerage or fund company will send you a tax form (usually a 1099-DIV) by January 31 showing the dividends you received in the previous year. You report this on your tax return. If you own stock in multiple accounts or through multiple funds, you may receive several 1099-DIV forms.

What affects Costco's dividend amount

Costco's board of directors decides the dividend amount each quarter based on the company's earnings, cash flow, and capital needs. A strong quarter with higher profits makes an increase more likely. The board also considers whether the company needs cash for expansion, debt repayment, or other investments.

The dividend is not may provide to increase every year or stay the same. Economic downturns, supply chain disruptions, or other business challenges can lead the board to hold the dividend flat or, in rare cases, reduce it. During the 2008 financial crisis, many companies cut dividends; Costco did not, which is one reason it is known as a reliable dividend payer.

Costco's stock price also affects how much dividend income you receive in dollar terms. If you own 100 shares and the dividend is $0.90 per share, you get $90 regardless of whether the stock price is $400 or $600. However, the dividend yield — the annual dividend divided by the stock price — changes as the stock price moves.

Comparing Costco's dividend to other retailers

Costco is unusual among large retailers because it pays a dividend at all. Many retail companies reinvest all profits into the business or return cash to shareholders through stock buybacks instead of dividends. Costco does both — it pays a dividend and buys back shares — which is one reason it appeals to income-focused investors.

Costco's dividend yield is typically lower than some other dividend-paying stocks because the stock price is high relative to the annual dividend. A yield of 0.8 to 1.2 percent is common for Costco, while some utility stocks or real estate investment trusts (REITs) pay yields of 3 to 5 percent or higher. The trade-off is that Costco's stock price has historically grown faster than many high-yield stocks.

Frequently Asked Questions

Do I get a dividend if I only have a Costco membership?

No. A membership card gives you access to the warehouse and member pricing, but it does not make you a shareholder. You must own shares of Costco stock to receive dividends. Membership fees are separate from stock ownership.

How much do I need to invest to start receiving Costco dividends?

You can buy as little as one share of Costco stock through most brokerages. The cost depends on the current stock price, which changes daily. Once you own shares and hold them on the record date, you receive the quarterly dividend, though the dollar amount will be small if you own only a few shares.

Can I receive Costco dividends in my 401(k) or IRA?

Yes, if your 401(k) or IRA holds Costco stock or a fund that includes it. You do not pay taxes on the dividend when you receive it in a traditional 401(k) or IRA; you pay taxes when you withdraw money in retirement. In a Roth account, may have access to dividends are tax-free in retirement.

What happens to my dividend if I sell my Costco stock?

You receive the dividend only if you own the stock on the record date set by the company. If you sell before that date, you do not receive that quarter's dividend. If you sell after the record date, you still receive the dividend even though you no longer own the shares.

Is Costco's dividend may provide to increase every year?

No. While Costco has a history of increasing its dividend, the board can hold it flat, increase it by different amounts, or reduce it if business conditions change. Past performance does not may provide future results.