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Don’t Be Fooled By Its Low Yield — Costco Is a Great Dividend Stock

Warren Buffett may have sold his stake in Costco Wholesale (NASDAQ: COST). But after declaring a $10 special dividend on Monday, Costco is looking like an even better investment. Let’s take a look at Costco’s business and dividends.

It was surprising that Buffett’s Berkshire Hathaway sold all of its Costco shares last quarter. However, the legendary investor may have his own reasons that don’t apply to the individual investor. Costco has an excellent, differentiated business model with solid growth and a strong trajectory going forward. That makes it a great candidate for a long-term portfolio.

Customers pay an annual fee of $60 for a basic membership and $120 for an executive membership for the privilege of shopping at the company’s large warehouses and taking advantage of their low prices. Member retention is strong, at around 90% in a typical quarter, and Costco also gains millions of customers annually.

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