Just five months after Costco Wholesale (COST 1.35%) gave shareholders a generous special dividend of $10 per share, the company announced today it is now raising its base dividend by 12.9%. The new $0.79 quarterly dividend is an increase from the previous $0.70, and represents an annual yield just shy of 1% at today's share price of about $368.
The move comes as the retailer has operated throughout the pandemic as an essential business. Last month, the company said net sales for it second quarter, which ended Feb. 14, rose almost 15% compared to the prior-year period. E-commerce sales in the quarter soared 76%.
Costco, the third largest global retailer, has long been known as a good employer to its 275,000 workers. The company led retailers in raising its starting wage to $15 per hour in 2019, and said in February 2021 that it will now increase that to $16. CEO W. Craig Jelinek told lawmakers at a Senate hearing that the pay rate isn't just out of kindness: "At Costco, we know that paying employees good wages ... makes sense for our business and constitutes a significant competitive advantage for us. It helps us in the long run by minimizing turnover and maximizing employee productivity."
The company's results continue to confirm that, and Costco also shares its success with shareholders. In addition to the newly raised dividend, longer-term shareholders have enjoyed seeing the stock price almost double in the last three years.
The success appears likely to continue as its most recent monthly results in March showed sales continued to increase, coming in 18% higher than one year ago. Shareholders today are happy to hear that the growing business success will result in additional income in their portfolios.