Costco does pay dividends, but not every year and not in the way most dividend stocks work

Costco Wholesale Corporation (ticker: COST) pays dividends to shareholders, but the company does so on its own schedule rather than quarterly like many large corporations. Costco has paid special dividends — one-time payments beyond regular distributions — more often than it has paid regular quarterly dividends. If you own Costco stock, you will receive dividend payments, but you should not count on them arriving at predictable intervals or in consistent amounts.

The company's dividend history shows a pattern: Costco went years without paying any dividend at all, then began special dividends in 2009, and added a small regular quarterly dividend in 2010. Since then, the regular quarterly dividend has grown, but special dividends remain the larger and more frequent payouts. This matters because it changes how you should think about Costco as an investment.

Key Takeaways

  • Costco pays both a regular quarterly dividend and special one-time dividends, with special dividends typically being larger and more frequent.
  • The regular quarterly dividend is small relative to the stock price, so Costco is not a high-dividend-yield stock.
  • Special dividends are not may provide and do not follow a set schedule, so you cannot rely on them for predictable income.
  • You must own the stock before the ex-dividend date to receive a dividend payment for that period.

How Costco's regular quarterly dividend works

Costco's regular quarterly dividend is paid four times per year to shareholders who own the stock on the ex-dividend date. The amount per share has grown over time — it was less than 20 cents per share when it started in 2010 and has since increased to around 50 cents per share, though this figure changes as the company raises its dividend. If you own 100 shares, you would receive roughly $50 per quarter, or about $200 per year, based on recent rates.

The ex-dividend date is the key date to know. If you buy Costco stock after the ex-dividend date, you will not receive the upcoming dividend payment — the previous owner will. Costco announces ex-dividend dates in advance, usually several weeks before the payment date, so you have time to plan if dividend timing matters to you.

The regular quarterly dividend yield — the annual dividend divided by the stock price — is typically between 0.5% and 1%. This means Costco is not a stock you buy primarily for dividend income. You buy it for potential stock price growth, and the dividend is a smaller bonus on top.

Special dividends are larger but unpredictable

Costco's special dividends have been the real money for dividend investors. The company has paid special dividends roughly every two to three years since 2009, and these payments are often $5 to $10 per share or more — far larger than the quarterly dividend. A special dividend of $7 per share on 100 shares means $700 in a single payment, compared to $50 from a quarterly dividend.

The catch is that special dividends are not may provide and do not follow a predictable schedule. Costco pays them when the board decides the company has excess cash and wants to return money to shareholders. This might happen every two years, or it might not happen for four years. You cannot plan your finances around a special dividend the way you can with a quarterly payment.

Special dividends are typically announced after the company reports earnings, so watching Costco's quarterly earnings announcements is the best way to stay informed. Financial news sites and Costco's investor relations website will report the announcement immediately.

Why Costco does not pay regular high dividends

Costco reinvests most of its profits into the business — building new warehouses, upgrading technology, and expanding internationally. The company prioritizes growth over returning cash to shareholders through dividends. This strategy has worked: Costco's stock price has grown significantly over decades, which is how most Costco shareholders make money.

Companies that pay high regular dividends are often mature businesses with slower growth, like utilities or real estate investment trusts. Costco is still expanding, so management believes reinvesting cash creates more value for shareholders than paying it out. Whether that belief is correct depends on whether the stock price continues to rise — if it does, shareholders come out ahead even with low dividends.

What you need to do to receive Costco dividends

You must own Costco stock in a brokerage account or retirement account (such as an IRA or 401(k)) to receive dividends. When you own the stock on the ex-dividend date, the dividend is automatically deposited into your account on the payment date — usually within a few days of the ex-dividend date. You do not need to do anything to claim it.

If you own Costco through a mutual fund or exchange-traded fund (ETF) that holds Costco stock, you will receive dividends from that fund, not directly from Costco. The fund collects all dividends from its holdings and distributes them to fund shareholders according to the fund's rules.

Keep records of all dividend payments for tax purposes. Dividends are taxable income in the year you receive them, whether you reinvest them or take the cash. Your brokerage will send you a 1099 form at tax time showing all dividends paid to you during the year.

Tax treatment of Costco dividends

Costco dividends are taxed as may have access to dividends if you have owned the stock for more than 60 days around the ex-dividend date. may have access to dividends receive preferential tax rates — 0%, 15%, or 20% depending on your income — rather than being taxed as ordinary income. This is better than the ordinary income tax rates, which can be as high as 37%.

If you own Costco in a retirement account like a 401(k) or traditional IRA, dividends are not taxed when you receive them. You pay taxes only when you withdraw money from the account. In a Roth IRA, dividends are never taxed, even when you withdraw them.

Comparing Costco to other dividend stocks

Costco is not a dividend stock in the traditional sense. If you are looking for regular income from dividends, stocks like consumer staples companies, utilities, or real estate investment trusts typically pay higher and more consistent dividends. Those stocks might yield 2% to 5% or more per year.

Costco is a growth stock that happens to pay dividends. You buy it hoping the stock price rises, and the dividends are a secondary benefit. This is an important distinction because it changes how you should evaluate the investment. A 0.7% dividend yield is not attractive if the stock price is flat, but it is a nice bonus if the stock price rises 10% in a year.

Frequently Asked Questions

When does Costco pay dividends?

Costco pays regular quarterly dividends four times per year, typically in March, June, September, and December, though the exact dates vary. Special dividends are announced after earnings reports and paid within a few weeks. Check Costco's investor relations website or your brokerage for the current ex-dividend dates and payment dates.

How much is the Costco dividend per share?

The regular quarterly dividend is currently around 50 cents per share, though this amount increases over time as the company raises its dividend. Special dividends vary widely, typically ranging from $5 to $10 per share when they are paid. Check your brokerage or Costco's website for the most recent amounts.

Do I get the dividend if I buy Costco stock the day before the ex-dividend date?

No. You must own the stock before the ex-dividend date to receive the dividend. If you buy on the ex-dividend date or after, you will not receive that dividend payment. The previous owner receives it instead. This is why the stock price typically drops by roughly the dividend amount on the ex-dividend date.

What happens to my Costco dividends if I sell the stock?

If you sell the stock after the ex-dividend date but before the payment date, you still receive the dividend — it was already yours when you owned the stock on the ex-dividend date. If you sell before the ex-dividend date, you do not receive that dividend.

Can I reinvest Costco dividends automatically?

Most brokerages offer a dividend reinvestment plan (DRIP) that automatically uses your dividend payments to buy more Costco stock. This can be a simple way to compound your investment over time without having to manually reinvest the money. Check your brokerage's website to see if this option is available and how to enable it.