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Russian (RU) Eric Volkman, The Motley Fool
Thu, May 1, 2025, 9:53 AM 5 min read
In This Article:
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Costco and TJX both recently hiked their payouts by double-digit percentages.
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Costco's next dividend will be distributed to investors of record as of May 2.
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TJX's next dividend will be distributed to investors of record as of May 15.
What could be better than a big sale at your favorite retail store? That's right -- a meaty dividend raise from one of your favorite retail stocks. In recent weeks, not one but two powerful companies in the sector upped their quarterly payouts: Costco Wholesale (NASDAQ: COST) and TJX Companies (NYSE: TJX). What's more, both lifted their dividends by double-digit percentages.
Here's what this could all mean for investors.
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Several days after reporting its fiscal 2025 second-quarter results, Costco pulled the lever on its typical, once-per-year regular dividend raise. It lifted its quarterly disbursement by 12% to $1.30 per share, amounting to an annual figure of $5.20.
Will this help the stock regain popularity, though? Investors bid it down after the company took the wraps off its fiscal second-quarter numbers in early March. The results weren't necessarily discouraging, but investors' moods were dampened by management's warnings about the effect that President Donald Trump's tariffs would have on the retail sector in general, and Costco's own business specifically.
This is a genuine concern for Costco, as management noted around one-third of its sales come from imported goods. Compounding that, a significant portion of those come from countries that Trump has expressly targeted in his trade war, like China, Canada, and Mexico.
The company's shares have only recovered about half of the value they lost in that March slump, but I think they deserve a reappraisal. Firstly, it seems as if management is not only doing something about this, but doing so assertively. A March 16 article in the Financial Times, citing several suppliers it did not name, said that Costco officials were putting pressure on Chinese suppliers to cut their prices to help blunt the effect of Trump's import taxes.
Also, given that Trump has made some concessions to various U.S. companies and interests (such as exempting smartphones from the tariffs), it's very possible this trade conflict could lessen in the very near future. It has at least cooled substantially in a short period of time, and I wouldn't be surprised to see more concessions before long. This makes the still-beaten-down Costco stock a bargain to me.
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