Even If Costco Doesn't Pay a $10 or $15 Special Dividend in 2027, I'd Still Buy the Stock
2026-10-01 13:23
•Jack Delaney •The Motley Fool
••••• • Axe Cap view
Costco: Good Stock Without the Special Dividend
Costco’s fundamentals and cash flow make it a solid buy even if the rumored special dividend doesn’t materialize in 2027.
Costco’s business is straightforward but strong: nearly 90% of its members renew annually, showing real customer loyalty, which is hard to find these days. The retailer keeps expanding—closing in on 1,000 stores—with a focus on cost efficiencies and bulk buying that should protect it in rough economic times. Its cash pile, over $20 billion, is a cushion that opens multiple strategic options, whether that’s dividends, buybacks, or accelerated growth. South African investors won’t find a direct JSE equivalent, so the USD/ZAR rate is key—if the rand weakens, import costs for retailers rise, but Costco’s pricing power in the U.S. offsets some risks. This company isn’t dependent on a special dividend to justify buying in; the long-term profit engine is intact. That said, if Costco’s model faces disruption from faster ecommerce trends or inflation hits harder than expected, the story could falter. this is just our opinion and not financial advice
Buy Costco via international exposure or USD/ZAR-linked instruments to hedge against rand weakness. Trim if currency risk spikes sharply or if global retail trends rapidly shift.
- USD/ZAR
- Costco (COST)
- Stronger rand reducing USD returns
- Disruption from ecommerce or inflation pressures
6/10
Costco is a compelling long-term investment regardless of whether it pays a special dividend in 2027. The warehouse retailer demonstrates strong fundamentals including nearly 90% membership renewal rates, growing customer base (84.1 million paid members), expanding store count (939 stores in fiscal 2026, targeting 967 in fiscal 2027), and a loyal customer base driven by bulk pricing and private-label Kirkland Signature brand. With $20.2 billion in cash on hand, a special dividend remains possible but is not necessary to justify ownership.
Our take is based on reporting first published by The Motley Fool.