Costco Stock Drops 3% After Earnings as Wall Street Expects Special Dividend Ahead
Miles Bennett
Costco beat on revenue and matched EPS estimates in Q3, yet shares slid roughly 3% pre-market — the special dividend investors had priced in never came, though multiple banks say it could land within a few quarters.
Numbers were fine — so why did the stock drop?
Costco's fiscal Q3 revenue topped expectations, and earnings per share matched the LSEG consensus. No obvious miss.
But investors had baked in an extra catalyst: a special dividend — a one-time cash payout outside the regular quarterly cycle.
This means → the sell-off was not about weak results. The "bonus good news" simply did not show up, and unmet expectations alone were enough to pressure the stock.
What is a special dividend, and how often has Costco paid one?
A special dividend is a large, one-off cash distribution on top of the regular quarterly payout, typically funded by excess cash reserves.
Costco's track record: $15 per share in January 2024, $10 in December 2020, $7 in May 2017, $5 in February 2015, $7 in December 2012.
In plain terms = the company has paid one roughly every 2 to 3 years, with the amount rising each time — the most recent was the largest ever.
When does Wall Street expect the next one, and how big?
Bernstein analyst Zhihan Ma wrote Friday: "Given the company's strong cash reserves, we would not be surprised to see a special dividend."
Bank of America analyst Christopher Nardone was more specific: the last payout came in January 2024, and Costco's historical cadence points to an announcement within the next few quarters.
Nardone also estimated that the last special dividend carried a yield of about 2.4%. Matching that yield at today's stock price would require roughly $24 per share — about 60% above the prior $15.
What does this mean for Costco shareholders?
Costco's regular quarterly dividend yield sits at just 0.59%, and the stock is up roughly 15% year-to-date — not a cheap entry point.
This means → whether the special dividend materialises, and at what size, is the next key test of the company's willingness to return capital.
In plain terms = the stock has already rallied significantly. The market now needs a "real cash back to shareholders" signal to sustain confidence — and the special dividend is exactly that signal.
Content is for reference only, not financial advice.