Here's How Many Shares of Costco You'd Need to Generate $10,000 in Yearly Dividends

Costco (NASDAQ: COST) is a clear juggernaut in the retail sector. It reported $69 billion in net sales just in the last fiscal quarter (Q3 2026 ended May 10). This makes it the world's third-largest retailer.

Investors have gained tremendously. In the past five years, the retail stock has produced a total return of 137% (as of July 28). A small part of this performance comes from the company's quarterly payout.

Here's how many Costco shares you'd need to generate $10,000 in yearly dividends.

Image source: The Motley Fool.

Capital appreciation is the main driver of investor returns

In April, Costco's board of directors increased the quarterly payout from $1.30 to $1.47. This means that the company pays $5.88 to its investors per share annually. To collect $10,000 in yearly dividend income, investors would need to own about 1,701 shares. At the current stock price of $967.40, this would require an upfront investment of more than $1.6 million.

The dividend yield is low at 0.61%. Consequently, investors shouldn't see Costco as a top dividend stock.

But there are two positive trends to keep in mind. In the past decade, the dividend has increased by 227%. And the company occasionally pays out sizable special dividends. Most recently, it paid out $15 per share in January 2024.

The priority is to reinvest in the business. Once management believes there is excess cash, a special dividend will be on the table. "But no plan to share at the present time," chief financial officer Gary Millerchip said on the Q3 2026 earnings call.

Costco shareholders mainly benefit from capital appreciation. The stock price has risen 128% in the last five years, meaningfully outpacing the broader S&P 500 index.

This is a high-quality and expensive stock

This company has a history of sustainably growing its profit year in and year out. Costco's diluted earnings per share climbed 79% from Q3 2021 to the third quarter of fiscal 2026.

The growth story isn't over. Management aims to open 26 net new warehouses this fiscal year. The long-term plan is to open 30 or more new stores annually, with opportunities both in the U.S. and internationally. This supports more members and more spending, which then translate into durable sales and earnings gains.

Given how high the valuation is, however, investors should be patient. The stock's price-to-earnings ratio of 48.6 is extremely expensive, although it has come down in the past year and a half. Costco is a great company, but the dividend would make more sense at a calmer valuation.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.