Costco Wholesale Corp. on Friday said that its board of directors has declared a special dividend of $5 per share payable on Feb. 27. The aggregate payment of approximately $2.2 billion will be in addition to Costco’s regular quarterly cash dividend of .355 per share.
The special dividend will be funded through existing cash and additional borrowings.
"Today's announcement of a $5 special dividend is our latest step in returning capital to our shareholders while maintaining our conservative capital structure,” Richard Galanti, Costco’s CFO, said in a statement. “Our strong balance sheet and favorable access to the credit markets allow us to provide shareholders with this dividend, while also preserving financial and operational flexibility to grow our business globally; and allowing for ongoing dividend and share repurchase activities."
The Issaquah, Wash.-based company paid a $7 special cash dividend to shareholders in December 2012.
Analysts had anticipated that Costco could make a special dividend payment following its repatriation of $1.2 billion in cash from Canada in August. In a note to investors Friday, analyst Chuck Grom of Sterne Agee said a more aggressive share buyback “would complement today’s dividend nicely.”
“A look back at the company’s share repurchase activity reveals a high level of inconsistency from quarter-to-quarter,” Grom said. “Given the aforementioned balance sheet strength and stable business model – we would like to see COST ramp up its buybacks — there is currently $2.7 billion remaining on its authorization.”
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