Key Points
- Costco announced a record $30-per-share special dividend and reauthorized a $4 billion stock repurchase program.
- Strong October sales and improving membership metrics support Costco's growth outlook ahead of December earnings.
- Costco shares have reached new highs, but investors should understand the dividend's eligibility dates and potential share-price adjustment.
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We interrupt the salacious Jensen Huang story to bring you back to some boring old market mechanics. Costco Wholesale Corp. (NASDAQ: COST) announced a new special dividend on Nov. 10, the sixth special dividend it has paid since starting the program in 2012.
But while the announcement itself wasn’t a shock (MarketBeat anticipated another payout back in May), the payout size surprised analysts and quickly pushed the stock to new all-time highs. However, any investor tempted to sell this news is likely misreading the story. The record $30 payout proves Costco’s sales machine keeps churning, and the company is generating more free cash than it can deploy back into the business.
The Dividend Size Is a Confidence Signal Ahead of Next Conference Call
Costco announced the special dividend following the close of trading on Nov. 10, pledging $30 per share to all holders of record as of Nov. 24. The dividend will be paid on Dec. 4, and the company also reauthorized its $4 billion buyback program through 2030, replacing the previous authorization. The dividend will require about $13.3 billion in cash to fund (Costco has traditionally funded its special dividends from cash reserves), and Costco ended fiscal 2026 sitting on a cash pile worth more than $20.2 billion.
The $30 payout is twice the previous $15 special dividend in 2024 and larger than even the most optimistic analysts projected. Previous iterations of the special dividend grew by about 40% to 50% (i.e., $7 to $10 in 2020, $10 to $15 in 2024), so a 100% increase over the previous payout signals confidence in future earnings. CFO Gary Millerchip calls the special dividend “the most effective way to return excess cash” because it rewards long-term shareholders while also maintaining flexibility for company investments.
Based on current projections, the company has plenty of leg room for a payout of this magnitude. Special dividend obligations amount to about 66% of fiscal 2026 cash, and 2027 capital expenditure (CapEx) projections were raised to $7.5 billion with 33 planned warehouse openings, including five relocations, showing this payout is by no means choking off growth. Sanford Bernstein raised its price target to $1,155 following the announcement.
Sales Engine Is Accelerating Even Without Gas Tailwinds
The special dividend comes from the company’s cash pile, which continues to grow amid record sales, even after stripping out volatile gas and currency components. The company has already reported nine weeks of fiscal Q1 2027 sales, with the most recent release covering the four weeks ending Nov. 1. U.S. comps grew 8.1% year-over-year (YOY) in the period, ex-gas and currency fluctuations, matching September's figure. Over the full nine-month period, sales grew 12.8% to $54.52 billion, versus 8.3% growth over the same span last year.
Gas is still a tailwind as high fuel prices spur more in-store visits, but total October comps were up 7.3% after stripping out gas and currency effects, well above last year’s 6.4% October pace. The core business is accelerating regardless of gas prices, and the quality of that growth continues to improve. Traffic grew to 3.3% from 2.4% in fiscal Q4 2026, and renewal rates were up 10 basis points sequentially. Digitally enabled sales are also up, posting 22.5% YOY growth in October vs. 20.5% growth over the previous nine weeks.
With a fiscal Q1 2027 earnings release scheduled for Dec. 10, Costco looks well-positioned to exceed the consensus revenue target of $74.35 billion. The real test is whether the company can surpass the projected 13.1% quarterly earnings per share (EPS) growth figure, and how much tariff refunds contribute to the bottom line versus organic sales and margin growth.
Technical Signals Confirming New Uptrend
COST shares rode a seesaw for most of 2026, but a new breakout has the stock hitting new all-time highs, and plenty of momentum is building ahead of next month’s earnings call. The previous all-time high came in May during the height of the Iran War oil spike, but as Strait of Hormuz traffic normalized, the rally in COST shares began to fizzle.
The downtrend began to flip in late September when the Moving Average Convergence Divergence (MACD) indicator performed a bullish cross. A previous bullish cross sent a false signal in July, but this one was confirmed when the stock re-took the 50-day and 200-day moving averages within a handful of trading sessions. Both the MACD and signal lines crossed over the histogram in early October, giving the stock the technical momentum to keep rallying. The special dividend announcement is one catalyst ahead of the Q1 2027 call and the holiday-season shopping, but investors must own shares before Nov. 24, the ex-dividend date, to be eligible for the $ 30-per-share payout. The share price will also typically adjust downward to reflect the dividend when the stock begins trading ex-dividend.
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