Costco Stock Moves Higher: What's Going On?

Costco Wholesale Corp. (NASDAQ:COST) shares are rising Wednesday. Investors react to its $30 per share special dividend, a payout of about $13.3 billion, and a reauthorized stock buyback.

• Costco Wholesale stock is showing upward bias. What’s the outlook for COST shares?

Costco Stock Rises On $30 Special Dividend

Costco’s board revealed the one-time payout Tuesday. Anyone who owns shares when trading ends Nov. 24 collects $30 each on Dec. 4, for a total near $13.3 billion. Costco’s last special dividend, in January 2024, was $15 a share and cost roughly $6.7 billion, so this one is twice as large.

The company has made similar payments in 2012, 2015, 2017 and 2020, typically after leaving cash to build for several years.

Costco has already put $3.1 billion into buybacks under a 2023 program that was due to end in January 2027. A new authorization of up to $4 billion is taking over, and it lasts through November 2030.

Mizuho Raises Costco Target After Special Dividend

Mizuho analyst David Bellinger responded by keeping an Outperform rating and raising the price target to $1,100 from $1,065. Mizuho had predicted a dividend of $18 to $20, so $30 came in well ahead, Bellinger wrote.

Beyond the usual quarterly dividend, the $30 works out to roughly 2.8% of extra yield, and the buyback comes in addition to the $13.3 billion. Costco has so much cash that finding uses for it is a challenge, Bellinger said, which Mizuho labels “a high-quality problem.”

Bellinger hopes this was the last special dividend and expects steady cash generation to let Costco shore up areas viewed as weak: online shopping, rapid delivery and advertising on its own platforms. Mizuho also lifted its estimates slightly, pointing to a strong start in the fiscal first quarter.

Cost Shares Are Rising

COST Price Action: Costco shares were up 1.15% at $1078.37 at the time of publication on Wednesday. The stock is approaching its 52-week high of $1096.50, according to Benzinga Pro.

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