Is Costco Wholesale Stock an Underrated Dividend Investment?

Core Viewpoint - Costco Wholesale has demonstrated significant growth, with shares increasing over 170% in the past five years, outperforming the S&P 500's 80% gains during the same period [1] Dividend Analysis - Costco's current dividend yield stands at 0.5%, which may not attract investors initially, but the company has a history of increasing dividends and paying special dividends, suggesting it could be an underrated income stock [2] - The dividend yield is lower due to the substantial rise in stock price; as the stock value increases, the yield decreases even if the dividend payment remains the same [2] - The quarterly dividend has doubled from $0.65 at the start of 2020 to $1.30, reflecting a compounded annual growth rate of 12.2% [3] - Costco has issued special dividends twice, paying $10 per share in 2020 and $15 per share in 2023, indicating a strong performance and willingness to reward shareholders [4] Investment Perspective - While Costco's dividend should not be the primary reason for investment, it is a valuable aspect that may be overlooked due to its low yield [6] - The stock is currently valued at over 50 times earnings, which may be challenging for some investors, but it could still be a good long-term investment due to growth potential and dividend benefits [7] - For long-term investors, Costco represents a solid stock to hold, benefiting from both growth and dividend payments over time [8]