It’s hard to think about dividends with the S&P 500 making new highs every day, but isn’t offering your typical quarterly dividend.
The company has a history of paying special dividends to shareholders, which are typically announced without warning during an earnings report.
Why the Next Costco Special Dividend Could Come Later This Year
Costco has several traditions that keep it in the upper echelon of the retail sector: the high-quality Kirkland Signature brand, the $1.50 hot dog and soda combo, and the periodic special dividend paid to shareholders.
Management first paid the special dividend in 2012, announcing a one-time $7-per-share payout to common stockholders that required approximately $3 billion in cash.
The company has paid a special dividend every few years since, with the most recent payout of $15 per share in January 2024.
The special dividend is paid in addition to the standard dividend, which yields 0.58% and is paid quarterly.
While the company has yet to make any announcements, there’s strong evidence that the next special dividend could be coming later this year:
Historical Pattern: An “Every Few Years” Rhythm
After the first special dividend in 2012, Costco paid special dividends again in 2015, 2017, 2020, and 2023. While five data points aren’t exactly a treasure trove, they do suggest special dividends are paid every 2.75 years.
The last special dividend was announced during fiscal Q1 2024 earnings in December 2023, which means the upcoming Q1 2027 report later this year would be the typical timeframe for a new special dividend announcement.
Strong Balance Sheet: Cash Matters More Than Tradition
Costco typically doesn’t use debt or stock issuance to fund special dividends. The previous payout in 2024 required $6.7 billion and was funded entirely from cash, so they’re announced only when the company’s balance sheet is strong enough to support them.
As of fiscal Q1 2026, Costco is sitting on about $16.22 billion in cash and cash equivalents, which is roughly double what it held before the 2023 special dividend announcement. A payout of $20 per share would require about $9 billion, which could easily be absorbed without issuing stock or debt.
Operating Momentum: Comps Reaccelerated in March
Sales growth is the best way to replenish the cash pile following a special dividend, and Costco once again has revenue momentum thanks to a new catalyst.
March comp sales were up 9.4% year-over-year (YOY), well above the 31-week average of 7.2%. One major catalyst for sales growth was the Strait of Hormuz closure, which has driven gas prices to multi-year highs. High gas prices are typically bullish for warehouse clubs with gas, such as Costco and BJ’s Wholesale Club Holdings Inc., which often see membership sign-ups increase as consumers become more cost-conscious about fuel.
However, hurdles to a special dividend payout remain. COST stock still trades at 50x forward earnings, which is uncomfortably high for a company with 3% net margins that remain vulnerable to tariffs. But the company has plenty of cash to support another special dividend, and the timing aligns with previous iterations. If the next special payout comes this year, it’ll likely be announced during the fiscal Q1 2027 earnings report.
Daily Chart Shows Momentum Building Despite Rangebound Trading
Buying a stock in anticipation of a special dividend makes little sense if the shares are in a downtrend, but COST is showing signs of breaking out.
Investors got an early 2026 surprise when the stock posted gains in 12 of 14 days at the start of the year, breaking out of a six-month downtrend. COST shares are up around 16% year-to-date (YTD), but the stock is still more than 5% below its February 2025 all-time high of $1076 and has struggled to break out of a tight trading range.
However, this could just be a lengthy consolidation process before the next move higher, a scenario that’s becoming increasingly likely according to technical signals.
The January winning streak took the COST share price back above the 50-day and 200-day moving averages for the first time since August, a move that often signals the start of a sustainable rally.
While the Golden Cross is often a lagging indicator, the stock now appears to have strong support along the 50-day moving average as the price consolidates. The Relative Strength Index (RSI) has also been trending upward since early March and appears poised to enter bullish territory above 50.
Special dividend or not, COST shares look like they finally have technical momentum on their side ahead of the anticipated fiscal Q3 2026 earnings release on May 28.
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