1 Reason I'm Never Selling Costco Stock

I've been a fan of Costco Wholesale (NASDAQ: COST) for decades. I didn't become a shareholder of the warehouse club operator until a little more than five years ago. I initiated my position in the springtime of the pandemic. I have lightened my position over the past year, but it's still one of my larger stock positions.

There's a lot to like about Costco stock. Despite selling some of my shares earlier this year, I expect the niche leader to always be a part of my portfolio. I want to go over a few of the reasons why I find Costco appealing, ultimately leading up to the top reason why I am a shareholder in the retail icon.

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Some good reasons to buy Costco

It's never a bad thing to be a be an investor in a company that's well-liked by its own employees, even if that's not the biggest reason why I continue to be a stakeholder. Costco is routinely touted as a good company to work for, managing to pay its front line well without sacrificing the value proposition it offers its shoppers. The proof is in the turnover.

Retail can be fickle, and employee turnover for the category hovers around 60% a year. Costco -- on the other hand -- sees an average of just 8% of its employees moving on in any given year. Employees on workforce reviews hub Glassdoor give Costco 3.9 out of 5 stars. It may not seem like a lot, but consider that its two closest rivals -- Walmart's (NYSE: WMT) Sam's Club and BJ's Wholesale (NYSE: BJ) -- command much lower scores of 3.3 and 3.0, respectively.

I'm also not a Costco investor primarily for the quarterly distributions. Its dividend yield is a modest 0.6%, just below Walmart at 0.9%. BJ's has yet to declare a payout since returning to public trading seven years ago. Costco has come through with 20 consecutive years of dividend hikes, but the yield remains low because the healthy stock gains have historically outpaced the distribution rates. Costco does occasionally announce a large special dividend -- the last time being in 2023, with a one-time distribution that added 1.5% to that year's income haul -- but that's never going to be the top draw to Costco as an investment.

This brings us to valuation, which once again is not the main reason why I became and continue to be a Costco shareholder. Costco hasn't been called cheap in years, if not decades. Costco trades at a rich 49 times trailing earnings. Walmart fetches a hefty bottom-line multiple of 36. Only BJ's is at a somewhat reasonable P/E ratio of 20. Costco also trades at higher revenue multiple than its peers. Again, Costco isn't cheap. It has earned its premium. This brings me to the main reason why I'm not selling out of my entire Costco position anytime soon.

Costco is an all-weather winner

When I become a Costco shareholder in May of 2020, I saw a chain that defied the slowdown of retailers across the globe. It was allowed to stay open during the early days of the COVID-19 lockdown, as a provider of essential services. It was able to grow its sales by 9% in fiscal 2020, and that followed back-to-back years of double-digit percentage jumps.

Growth is a default setting for Costco. In good times and bad, it finds a way to keep its parking lots full and its registers busy. It has only had one year of negative revenue growth in the last 34 fiscal years, a modest 1.5% dip in 2009. That was during the Great Recession, a time that wrecked many retailers.

Investors have been rewarded for their faith over time. Costco's one-year gain is actually a decline of 7%, but the stock is up a market-besting 72% over three years and 147% over the past five years. Costco is built to succeed. It's also priced as such, but that's the price of admission for this all-weather marvel that I expect to continue owning for a long time.

Rick Munarriz has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.