Most large retailers boost their dividends in predictable ways, but Costco Wholesale (NASDAQ: COST) isn't your average retailer. The warehouse giant commits to returning a relatively small portion of its earnings each year in contrast to peers like . It then periodically surprises investors with windfall payouts. Another one of those big paydays might be on the way.

Costco's management team has decided that these special dividends are a better option than the typical return policy followed by most of its peers. "It's part of our DNA," CFO Richard Galanti said in a recent conference call with investors. Four prior special dividends have been paid in recent years, including a $10 per-share bonanza in late 2020. The previous one was three years earlier at $7 per share.

That history might suggest that these dividends are impossible to predict. But investors do have some clues suggesting a special dividend could be in the works. Galanti said last month that it's probably a matter of when, not if, for one. But the bigger tell is cash holdings.

Continue reading

Source Fool.com