In this segment of the MarketFoolery podcast, host Chris Hill gets a rare Earningspalooza visit from Hidden Gems' Abi Malin, who joins him to dig into the news that Costco (NASDAQ:COST) will be substantially increasing its quarterly dividends.
They consider how much investors should focus on dividends in forming their investment theses, as well as where Costco sits in the current retail environment.
A full transcript follows the video.
This video was recorded on April 25, 2018.
Chris Hill: Let's move on to Costco, which does not report earnings for another month. Costco did announce a 14% increase in the quarterly dividend. That's nice.
Abi Malin: That is nice.
Hill: That's really nice. And maybe not a shock that Costco or any large company that has money is raising their dividend. We've talked before about how one of the ripple effects of the cutting corporate taxes is, we're going to see more share buyback plans and we're going to see more dividends. As a general rule of thumb, where do dividends sit in the investing universe for you? Just, as someone who analyzes stocks and invests in stocks, is that something you're looking for? And if so, how high up the list is that?
Malin: It's not something I dislike, per say, but just given my personal interests, I'd rather look at a growth story, and I think dividends usually signify a pretty mature company that, it's not always a bad thing, but maybe they don't have somewhere to reinvest those funds to further growth, so it's less interesting to me than other options, but not necessarily unappealing.
Hill: Where is Costco as a retailer for you? Because I know that retail is an industry that you're interested in.
Malin: Yeah. I've looked at this industry a lot, I've never spent too much time on Costco. I tend to stay in the smaller-cap area. I still think it's interesting. When you look at the numbers, I think it's really easy to forget that some of these big box stores are still very relevant and still doing very well. I think a lot of times, we get caught up in the Amazon of the world, but I think Costco is still very interesting.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Abi Malin has no position in any of the stocks mentioned. Chris Hill owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.