Please ensure Javascript is enabled for purposes of website accessibility

What Costco's 14% Dividend Boost Means

By Motley Fool Staff - Apr 30, 2018 at 8:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The warehouse retailer is one of many companies boosting shareholder payouts in the wake of the GOP’s corporate tax cuts.

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 (COST 1.35%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$485.76 (1.35%) $6.48

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.