Costco does pay dividends, but only to Class A shareholders

Costco Wholesale Corporation issues quarterly dividends, but only to owners of Class A stock. If you own Class B shares — the type most individual investors buy through a brokerage account — you receive no dividend payments. This two-class structure is unusual among large retailers and means the dividend benefit depends entirely on which share class you hold.

Class A shares trade over-the-counter (OTC) and are rarely held by individual investors because they cost roughly 250 times more per share than Class B stock. As of early 2024, Class A shares traded around $800,000 per share, while Class B shares traded around $900. Most Costco dividend income flows to institutional investors and company insiders who own Class A stock.

The company has paid dividends consistently since 2004, increasing the per-share amount most years. However, the dividend yield — the annual payout divided by the share price — remains modest for Class A holders and is zero for Class B holders.

Key Takeaways

  • Only Costco Class A shareholders receive dividends; Class B shareholders receive nothing, regardless of how long they hold the stock.
  • Class A shares cost roughly $800,000 per share and are held primarily by institutions and insiders, not individual retail investors.
  • Costco has paid dividends every quarter since 2004, with increases most years, but the dividend yield is typically below 1 percent.
  • Class B shareholders benefit from stock price appreciation instead, and Costco has also repurchased shares, which can increase per-share value.

The difference between Costco's two share classes

Costco's Class A and Class B shares represent different ownership stakes with different rights and payouts. Class A shares carry one vote per share and receive all dividends. Class B shares carry one-tenth of a vote per share and receive no dividends. This structure allows the founding Sinegal family and other early investors to maintain control through Class A ownership while the company raises capital through Class B share sales.

The price gap between the two classes reflects this dividend difference. Class A shares trade at roughly 250 times the price of Class B shares because they include the right to all future dividend payments. If you buy Class B stock, you are explicitly buying a non-dividend-paying security. The company does not plan to change this structure, so Class B shareholders should not expect dividend income in the future.

What Class A shareholders actually receive

Costco pays Class A dividends quarterly, typically in March, June, September, and December. The per-share amount has grown over time. In 2004, the first dividend was $0.15 per share per quarter. By 2023, the quarterly dividend had reached $0.90 per share. A Class A shareholder holding 100 shares would receive $90 per quarter, or $360 per year, though the actual number of shares held at that price point is extremely small.

The dividend yield on Class A stock — the annual payout divided by the current share price — typically falls between 0.4 and 0.6 percent. This is lower than the yield on many other large retailers and much lower than the overall stock market average. Class A shareholders benefit more from stock price appreciation than from dividend income. Costco has also repurchased its own shares, which increases the value of remaining shares without paying cash to shareholders.

Why Class B shareholders do not receive dividends

Costco's bylaws explicitly reserve all dividends for Class A shareholders. This is not a temporary policy or a decision made by the board each year — it is written into the company's founding structure. The company could theoretically amend its bylaws to pay dividends to Class B shareholders, but doing so would require shareholder approval and would likely face resistance from Class A holders who benefit from the current arrangement.

From a practical standpoint, Costco has chosen to return cash to Class B shareholders through share repurchases rather than dividends. When a company buys back its own stock, the remaining shares represent a larger piece of the company, which can increase their value over time. This approach is tax-efficient for many shareholders because capital gains are taxed only when you sell, whereas dividends are taxed in the year they are paid.

How to check which share class you own

Your brokerage statement will show your share class in the security description or symbol. Class B shares typically appear as COST (the Nasdaq ticker) or with a note that says "Class B." Class A shares appear as COSTCO or with a note that says "Class A." If you are unsure, log into your brokerage account and look at your holdings detail, or call your broker's customer service line with your account number.

If you own Class B shares through a 401(k), IRA, or other retirement account, the same rule applies — you own Class B and receive no dividends. The share class does not change based on the account type. Some investors mistakenly believe that holding Costco stock in a retirement account makes them may be able to access for dividends, but the dividend may be able to access is determined by share class, not by account type.

What happens to dividends in retirement accounts

If you own Class A shares in a retirement account like a traditional IRA or Roth IRA, the quarterly dividends are paid into the account and reinvested automatically. You do not receive a check; instead, the cash sits in your account's money market fund or is used to buy additional shares if you have set up dividend reinvestment. The dividends are not taxed in the year they are paid if the account is a traditional IRA, but they are taxed when you withdraw money from the account in retirement.

In a Roth IRA, Class A dividends are not taxed at all, either when paid or when withdrawn. However, the vast majority of individual investors own Class B shares, so this scenario applies only to the small number of people who hold Class A stock in retirement accounts.

Comparing Costco to other dividend-paying retailers

Most large retailers that pay dividends — such as Walmart, Target, and Home Depot — pay dividends to all shareholders equally. Costco's two-class dividend structure is the exception, not the rule. Walmart, for example, pays a dividend yield around 0.6 to 0.8 percent to all shareholders. Target's yield is typically 1.5 to 2 percent. These companies do not distinguish between share classes when paying dividends.

Costco's decision to pay dividends only to Class A shareholders reflects its ownership structure and the company's choice to return cash to Class B shareholders through buybacks instead. If dividend income is important to your investment strategy, you may want to compare Costco's total return (price appreciation plus buybacks) to other retailers' total return (price appreciation plus dividends) over the same time period.

Frequently Asked Questions

If I buy Costco stock today, will I ever receive dividends?

Only if you buy Class A shares, which cost around $800,000 per share and are not available through standard brokerage accounts. If you buy Class B shares (the normal way), you will not receive dividends. The company's bylaws reserve all dividends for Class A shareholders, and this structure is unlikely to change.

Do Costco dividends get reinvested automatically?

If you own Class A shares and have set up dividend reinvestment with your broker, yes — the quarterly dividend is automatically used to buy additional shares. If you own Class B shares, there is no dividend to reinvest. You can set up automatic reinvestment for any future dividends if you later acquire Class A stock, but most brokers require you to request this in advance.

Why does Costco have two share classes?

The two-class structure allows the founding Sinegal family and early investors to maintain voting control through Class A ownership while the company raises capital from the public through Class B sales. Class A shares have more voting power and receive all dividends. This structure is common among family-controlled companies but rare among large retailers.

Is Costco stock a good dividend investment?

For Class B shareholders, Costco is not a dividend investment at all — it pays no dividends. The stock's return comes from price appreciation and share buybacks. If you are looking for dividend income, other retailers may be better choices. If you are looking for long-term growth, Costco's historical performance may appeal to you regardless of the lack of dividends.

What is the current Costco dividend per share?

Costco's quarterly dividend for Class A shareholders changes periodically. You can find the current amount on Costco's investor relations website under "Dividends" or on your brokerage statement if you own Class A shares. The amount is typically announced a few weeks before each quarterly payment date.