Costco (NASDAQ:COST) has shown that its business model won't be upended by the ongoing digital revolution. The warehouse club has steadily grown its membership while maintaining roughly 90% renewal rates.

Those are tremendous signs for a company that makes most of its money from memberships. Costco has been a consistent performer, with $3.66 billion ($8.26 per diluted share) in income for fiscal 2019, with companywide same-store sales growing by 6.1% for the year.

Because of its membership-based model, the company has predictable quarterly revenue. If the chain sees new memberships fall or renewal rates drop, it knows it needs to tweak its business model to protect its long-term success. That's an advantage over its retail rivals and a comfort for investors.

A Costco with a crowded parking lot.

Costco has paid three special dividends. Image source: Costco.

Dividends -- and maybe something special?

In addition to being a solid stock on its own merits, Costco also pays a dividend. It has steadily raised that payout each quarter from $0.10 a share in 2004 (when it first paid a dividend) to $0.65 in August of 2019. Over the past four quarters, the retailer has paid out $2.44 -- a little over 25% of its fiscal 2019 profits.

That's perhaps a modest payout for a company that has steady profits, over $8 billion in cash on hand, and $23 billion in assets (not counting property and equipment). But Costco has not limited itself to its quarterly dividend. The warehouse club also paid a $7-per-share special dividend in 2012, another for $5-per-share in 2015, and a $7-per-share special dividend in 2017.

It's possible the company plans another special dividend soon. CFO Richard Galanti addressed the issue in the company's fourth-quarter earnings call earlier this month:

We are always asked about questions about the special dividend, and our comments have been is that we've done three of them. They seem to have worked well, viewed positively. So it's still in the -- it's still in our back pocket. But they are special, and so we'll have to wait and see what we decide to do in the future. 

That's a big hint, suggesting the company will offer another special dividend at some point. Galanti added that "there's nothing specific that we have planned," but he made it pretty obvious that the retailer will offer another one at some point (probably sometime soon).

Costco is a proven business

Most retailers have to deal with ever-changing customer tastes. Costco is insulated from that by its membership base. Galanti laid out how strong that membership base is during the Q4 earnings call:

In terms of renewal rates, at Q4 end, our U.S. and Canada membership renewal rate came in at 90.9%, up 0.2% from 90.7% as of the end of the last quarter. And worldwide, the renewal rate was 88.4%, up from 88.3% a quarter ago. Both of these figures at all-time highs. In terms of number of members at Q4 and fiscal year-end, we had 53.9 million member households, that's up from a quarter ago of 53.1 million, and total cardholders at the end of the year, 98.5 million, up from 97.2 million at the end of Q3.

Those are stunning numbers that are in line with the renewal rates and membership growth the company has steadily posted year after year. Consumers like saving money, and they enjoy the "treasure hunt" experience of shopping at the warehouse club.

That's unlikely to change anytime soon (if ever). Add in the regular dividend and the possibility of a special dividend, and you have a stock that should continue to grow while paying you to own it. Those factors combined make Costco a strong company and as close to a perfect dividend stock as you can buy.