Costco CFO answers special dividend question | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Whenever Costco’s cash flow comes up, one question looms. Will the company pay a special dividend?

Executives are happy to talk around it without giving a straight answer. History shows they’ve done it before, and with cash piling up again, investors are left wondering if another surprise could be on the way.

While many companies pay a regular dividend to shareholders, special dividends — a sort of bonus, expected payment to people owning its stock — are rare.

“A special dividend is a non-recurring distribution of company assets, usually in the form of cash, to shareholders. A special dividend is usually larger compared to normal dividends paid out by the company and is often tied to a specific event like an asset sale, corporate restructuring, spinoff, or other windfall-generating event,” according to Investopedia.

Costco’s management team has decided that these special dividends are a better option than the typical return policy followed by most of its peers, according to The Motley Fool’s Demitri Kalogeropoulos.

“It’s part of our DNA,” former CFO Richard Galanti said in a fourth-quarter 2023 conference call with investors.

Costco does not tell investors when a special dividend is coming, but financial analysts who have examined its past payouts think it might be time for another.

Costco shares its cash spending plans

Scott Ciccarelli of Truist Securities asked CFO Gary Millerchip about a potential special dividend during the chain’s second-quarter earnings call.

“I know it has only been about two years or so, but the last time you had this much cash on the balance sheet, you did pay out a special dividend. So is that something we could see in the next few quarters?” he asked.

Millerchip answered, but in a very long, roundabout way.

“I would not say our financial strategy has really changed significantly as we think about cash. First, our first priority, of course, is always to invest in the business. As you have seen, we have been investing more capital in the last couple of years to support Ron’s priorities that he shared earlier,” he shared.

More Costco:

Millerchip noted that Costco has a strong pipeline of new warehouses, and plans expanded investment in its existing warehouses to improve the member experience.

“We are investing in depots and expanding the network there, not only to support our warehouses but also to support the e-commerce growth that we are seeing. And we are investing in digital, and we think there are plenty of opportunities to continue to invest in, and we feel good about the returns we can generate from those investments,” he said.

Costco has two types of membership.

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Costco’s CFO answers special dividend question

Millerchip did, however, address Ciccarelli’s question as to whether a special dividend may be coming soon.

“I think you are right — we are seeing strong cash flow buildup. The great thing about our model is it generates significant free cash flow, and even with the investments we are making, we are seeing continued growth in that cash,” he shared.

The CFO shared more financial plans, noting that any spending requires board approval.

We want to continue to grow the regular dividend because we think that is a core fundamental part of demonstrating our confidence in the future growth of the company.
We are continuing to buy back stock to avoid dilution from executive stock grants.

But, even with all of those efforts underway, a special dividend remains possible.

“What I would say on special dividend is while our cash balance is back to levels that they were pre the last special dividend, I think it is important to remember that to achieve a similar yield to last time when our stock was at $660, the cash would need to be greater. So we will continue to review the question of special dividend with our board, but there are no plans that we could share at this time around a plan for special dividend,” he added.

As an experienced investor, I’m generally wary of special dividends, but Costco is an exception. The company invests heavily in its brand, pays a regular dividend, and still has cash left over.

This is the rare case when special dividends are additive.

Costco’s special dividend history

2024 Special Dividend, $15.per share: Costco Wholesale Corporation declared a special cash dividend of $15 per share, payable Jan. 12, 2024, to shareholders of record Dec. 28, 2023. This is one of the largest special dividends in the company’s history, according to Costco Investor Relations (IR) and an 8-K filed with the SEC.
2020 Special Dividend, $10 per share: Costco’s Board of Directors declared a special cash dividend of $1 per share payable Dec. 11, 2020, to shareholders of record Dec. 2, 2020, according to a company press release and an SEC 10-Q filing.
2017 Special Dividend, $7 per share: Costco declared a special cash dividend of $7 per share, payable May 26, 2017, to shareholders of record May 10, 2017, according to Costco IR.
2015 Special Dividend, $5 per share: Costco declared a special cash dividend of $5 per share, payable Feb. 27, 2015, to shareholders of record Feb. 9, 2015, according to another Investor Relations press release.
These special dividends have been paid irregularly but consistently every few years when Costco has excess cash and strong operating results, according to a Motley Fool story, Costco Special Dividend History & Analysis.

Analysts weigh in on Costco’s special dividends

Oppenheimer analyst Rupesh Parikh was supportive of Costco’s last special dividend.

“This came a few months earlier than we forecasted,” Oppenheimer analyst Rupesh Parikh wrote in a commentary…Even after this payout, more special dividends are likely on the horizon in the coming years,” TheStreet’s Dan Weil reported.

Costco has also created expectations around special dividends, which has caused its stock to drop in the past.

“Analysts say the reason COST stock is falling after its latest print is that management failed to announce a one-time special dividend payment. Investors have come to expect special dividends from Costco and were expecting one again at the end of this year, only to be disappointed when none was announced,” TipRanks reported in Dec. 2025.

As Millerchip noted, however, with Costco it’s usually a question of when, not if.

“Costco has been like a rocket ship, and the surprise special dividends have acted like boosters that give the ride an extra jolt in a way that an ordinary dividend simply can’t do. The allure of a one-time cash payment that is the equivalent of more than three years of ordinary dividends is exciting and unique, and it fits the overall feel of Costco as an investment,” according to Danielle Foelber at The Motley Fool.