Last month, fellow Fool Matt DiLallo demonstrated just how easy it is for Costco (NASDAQ:COST) members to come out ahead after paying annual dues. Simply by buying gas every other week, the company's $55 annual membership is offset. Each additional discount purchase you make is like money in the bank!

While that's nice for Costco members, investors want to know what's next for Costco stock -- and its growing dividend.

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The most important metric for Costco's dividend
Right now Costco offers a 1.2% dividend yield. That alone isn't much for dividend investors to get excited about. However, they can take solace in the fact that the company's overall payout -- $1.42 per share -- has grown 15% per year since 2010.

And as you can see below, the payout is also very healthy.

This measures the free cash flow Costco has generated on an annual basis, and how much of that free cash flow is used to payout the dividend.

There are two clear takeaways from the graph above. The first is that Costco's dividend is very safe. Currently, only 35% of the company's free cash flow is being used to pay out its dividend. That means that if times get tough, it has more than enough cash on hand to continue its current payout level, and there's lots of room for growth in the future.

The second takeaway is, at first, somewhat alarming: Free cash flow does not appear to be consistently growing. In fact, it has shrunk by 17% since 2011; usually, this is a very bad sign.

In this case, however, I think there's more at play. Free cash flow is calculated by taking the amount of cash a company brings in and subtracting out capital expenditures. In Costco's case, "capital expenditures" usually means building new warehouses for future locations. As you might guess, those can be expensive.

Thus, the main reason Costco's free cash flow has shrunk is not because the company is bringing in less cash, but because capital expenditures have increased 65% since 2011. That's because people like what Costco has to offer, and the company is building out locations to meet that demand.

The strength of Costco stock
To figure out if Costco's stock -- and not just its dividend -- is worth your money, we need to do a little more digging. On this front, no metric is more important than the fees the company brings in from its yearly membership dues.

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TTM=Trailing 12 Months. Source: SEC filings.

It might surprise people to know that Costco's revenue from membership fees consistently outpaces its overall profit. In other words, increasing membership fees is the key driver to future growth. As the graph shows, membership fee revenues are growing at a steady pace -- roughly 8% per year.

There's little doubt Costco will continue to grow its footprint, membership rolls, and fees derived from those rolls. Not only is it expanding in the U.S., but Canada, Mexico, Japan, the U.K., Korea, and Australia.

As it stands now, however, Costco's stock is pretty expensive -- trading for about 28 times earning. If you're a long-term dividend investor, that presents less of a problem. As Costco's store base matures, it will have fewer capital expenditures, more free cash flow, and a bigger dividend.

In essence, whether the stock is a buy today or not depends on your goals -- and if you're a dividend-focused investor, it's definitely worth a look.

Brian Stoffel has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool owns shares of Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.