April 10, 2025 a 03:49 pm
COST: Dividend Analysis - Costco Wholesale Corporation
Costco Wholesale Corporation offers a promising dividend portfolio characterized by a long-standing history of consistent payouts, though its current yield remains modest. Despite a substantial payout ratio, the company demonstrates robust financial health, ensuring potential stability and growth in its dividend disbursements. With impressive past performance and strategic capital allocations, Costco is well-placed to maintain and potentially enhance its investor returns.
📊 Overview
Costco operates in a dynamic sector, promising modest dividend yields with resilient historical growth. Its comprehensive strategic approach refines operational efficiency and shareholder returns.
| Detail | Data |
|---|---|
| Sector | Retail |
| Dividend yield | 0.44% |
| Current dividend per share | 20.37 USD |
| Dividend history | 22 years |
| Last cut or suspension | None |
🗣️ Dividend History
The company's dividend history showcases consistency, highlighting its commitment to returning value to shareholders. Such a track record is crucial for investor confidence, reflecting financial stability and operational efficiency.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.16 |
| 2024 | 4.50 |
| 2023 | 18.96 |
| 2022 | 3.49 |
| 2021 | 3.07 |
📈 Dividend Growth
The substantial growth in dividends over three and five years reflects the company's robust operational execution and strategic capital management. This growth trajectory underlines potential future yields and investor returns.
| Time | Growth |
|---|---|
| 3 years | 13.59% |
| 5 years | 12.30% |
The average dividend growth is 12.30% over 5 years. This shows moderate but steady dividend growth.
⚠️ Payout Ratio
Payout ratios indicate the portion of earnings distributed as dividends, a measure of sustainability. Elevated ratios can denote high shareholder returns, yet may impinge on capital reinvestment capabilities.
| Key figure | Ratio |
|---|---|
| EPS-based | 118.65% |
| Free cash flow-based | 130.49% |
Given the EPS and FCF payout ratios of 118.65% and 130.49% respectively, Costco's current payouts surpass its earnings and cash flows, warranting attention to ensure sustainable future distributions.
💰 Cashflow & Capital Efficiency
Evaluation of cash flow metrics and capital efficiency measures cash generation and shareholder value enhancement. Effective management reflects in sustainable growth and strategic allocation of capital expenses.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 1.67% | 2.79% | 1.49% |
| Earnings Yield | 1.86% | 2.60% | 2.48% |
| CAPEX to Operating Cash Flow | 41.54% | 39.06% | 52.64% |
| Stock-based Compensation to Revenue | 0.32% | 0.32% | 0.32% |
| Free Cash Flow / Operating Cash Flow Ratio | 58.46% | 60.94% | 47.36% |
The moderate free cash flow yields and rising CAPEX ratios highlight reinvestment strategies to fuel future scalability and efficiency, though they necessitate sustained cash flow health.
📊 Balance Sheet & Leverage Analysis
The balance sheet strength, reflected in debt management and liquidity, assures financial security and operational flexibility. Leverage ratios and liquidity metrics reveal the company's fiscal posture and debt obligations.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 35.02% | 35.45% | 43.79% |
| Debt-to-Assets | 11.85% | 12.88% | 14.09% |
| Debt-to-Capital | 25.94% | 26.17% | 30.45% |
| Net Debt to EBITDA | -0.13 | -0.43 | -0.11 |
| Current Ratio | 96.57% | 106.84% | 102.18% |
| Quick Ratio | 43.99% | 57.26% | 46.22% |
| Financial Leverage | 2.96 | 2.75 | 3.11 |
The consistently moderate leverage and solid liquidity indicate operational resilience, poised for optional strategic deployments in growth or debt reduction during varying economic cycles.
🚀 Fundamental Strength & Profitability
Key profitability indicators, including returns and margin metrics, reflect Costco's operational excellence and capability to generate shareholder returns effectively. R&D allocations compared to revenue demonstrate focus on innovation.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 31.19% | 25.11% | 28.31% |
| Return on Assets | 10.55% | 9.12% | 9.11% |
| Net Margin | 2.90% | 2.60% | 2.57% |
| EBIT Margin | 3.89% | 3.57% | 3.52% |
| EBITDA Margin | 4.77% | 4.60% | 4.53% |
| Gross Margin | 12.61% | 12.26% | 12.15% |
| R&D to Revenue | 0% | 0% | 0% |
Profitability metrics reveal strong capital returns and efficiency, yet highlight areas for maintaining momentum. Absence of R&D allocations points to revenue-recycling efficiencies rather than direct innovation spend.
📉 Price Development
✅ Dividend Scoring System
| Criterion | Score | Bar |
|---|---|---|
| Dividend yield | 2 | |
| Dividend Stability | 4 | |
| Dividend growth | 4 | |
| Payout ratio | 3 | |
| Financial stability | 5 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 4 |
Total Score: 30/40
✅ Rating
Overall, Costco Wholesale Corporation presents a compelling investment with a well-rounded dividend profile. Strong financial foundations and a history of dividend consistency underscore its attractive shareholder returns, albeit with conservative growth. Investors seeking stable but modest yields in a well-managed company may find Costco an ideal candidate.