Just as a handful of companies are cutting or even suspending their dividends, Costco (COST 0.33%) is flexing its financial strength and the resilience of its business model during this economic downturn by announcing an increase to its dividend. Costco said last week that it is increasing its quarterly payout from $0.65 to $0.70, representing an 8% hike.

The boost in the club-warehouse retailer's dividend during these uncertain times is a good reminder of the quality of its dividend. The company's consistent and growing payout makes Costco a great dividend stock for investors looking for income from their portfolios.

Here are four reasons for investors to love Costco's dividend.

A grocery cart in the aisle of a wholesale store

Image source: Getty Images.

1. Impressive dividend history

Costco has been paying a regular dividend for years. Indeed, its first quarterly dividend goes back to 2004. This means the company has been paying dividends for 16 years straight, through both the Great Recession and the current coronavirus pandemic.

With a large portion of its sales coming from staple items, and with its value proposition to consumers being the substantial unit savings it provides its customers in exchange for membership and bulk purchases, the company's business model has proven to hold up well during times of consumer weakness. This makes Costco's dividend very reliable, as the company is able to grow its earnings even during downturns.

2. Consistent dividend growth

On top of regularly paying a dividend to shareholders. The company has increased its dividend every year since it initiated it in 2004. In fact, over the last six years, Costco's quarterly dividend payment has doubled, rising from $0.35 to $0.70.

3. A low payout ratio

Even if Costco's earnings do take a hit for one reason or another, the company will likely continue paying out a dividend thanks to its low payout ratio. Costco currently pays out only about 31% of its earnings, leaving plenty of wiggle room if the company faces unexpected headwinds. In addition, this means there's significant room for the dividend to grow in the coming years.

4. Costco occasionally pays special dividends

Costco's small 0.9% dividend yield doesn't tell the full story of the company's dividend, as the wholesale retailer also turns to special dividends from time to time to return even more cash to shareholders. In 2012, 2015, and 2017, Costco paid out one-time payments (special dividends) of $7, $5, and $7, respectively, to shareholders.

Given Costco's strong earnings growth since 2017, another special dividend in the near future is not only possible -- but likely.