Is Costco Stock a Good Buy?
If you are a long-term shareholder of Costco stock, you’ve no doubt seen a nice return on your investment. In fact, since its IPO in 1985, the stock has gone from $1.67 per share to, now, more than $300. In fact, Costco stock (Nasdaq: COST) has been so consistent in its growth, it’s widely considered to be a blue chip stock.
Why Costco Stock Is a Great Addition to Any Portfolio
In February of this year, the first reported cases of COVID-19 hit the United States. Since then, investors have been struggling to adjust their portfolios to the ever-changing consumption habits of everyday citizens. Industries like travel, manufacturing and building have taken big hits. While the healthcare, media and food industries have never been stronger.
Earlier this month, Trends Expert Matthew Carr highlighted the changing dynamic of the food supply chain…
“Shares of Costco (Nasdaq: COST), Kroger (NYSE: KR), Sprouts Farmers Market (Nasdaq: SFM) and Walmart (NYSE: WMT) are in the green for 2020. Those gains are certain to continue, while I expect processor shares to struggle hand in hand with restaurants. That’s why I believe investors should explore shorting the slaughterhouses and going long on grocers.“
Another fantastic reason to consider investing in Costco stock is its dividend history. Just last month, Costco committed to raising its quarterly payout from $0.65 to $0.70, an 8% increase. This is another fantastic sign of reliability, as the company has continued to raise dividend payouts every year since 2004. And with a payout ratio of just 31% of its earnings, the dividend is extremely safe, even if future cash flow becomes an issue.
In addition to the quarterly dividend payouts, Costco shareholders are also accustomed to receiving one-time payments (special dividends) of $5 or $7. These special dividends have been delivered three out of the past eight years, the most recent being in 2017.
Stay tuned for the upcoming earnings report set to take place on May 28, 2020. The report will reveal quarter three results for the company.
Is Costco Stock a Good Buy?
Costco continues to provide quality products and an excellent customer experience, all at an affordable price. This is a winning combination that has allowed Costco to grow along with its customer base. The number of awards Costco has won is impressive. Last year alone it received 15 Comparably awards, including Best CEO, Best Marketing Team and Best Sales Team.
All of that, combined with its impressive 16-year dividend history, low payout ratio and strong cash flow, makes it a great buy-and-hold blue chip stock for your portfolio.
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About Ben Broadwater
Ben Broadwater is the Director of Investment U. He has more than 15 years of content creation experience. He has worked and written for numerous companies in the financial publishing space, including Charles Street Research, The Oxford Club and now Investment U. When Ben isn’t busy running Investment U, you can usually find him with a pair of drumsticks or a guitar in his hand.