Here’s Costco’s Remedy for the Fiscal Cliff

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Costco (NASDAQ:COST) is showing the strength of its balance sheet. As Bloomberg reported on Wednesday, the warehouse merchant announced that a special dividend of $3 billion will be distributed to shareholders on December 18.

What Prompted Costco’s Dividend Announcement?

“It’s a tangible way of rewarding shareholders that avoids the lottery of a share buyback,” Kantar Retail analyst Bryan Roberts told the publication. “They’ve amassed significant cash reserves, partly due to their success. They have been one of the most successful retailers in the past 20 years.”

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Costco’s success resulted in $3.47 billion net cash reserve in September, the company’s highest cash level in twenty years.

With such a reserve at hand, same-store sales up 6 percent in the four weeks ended on November 25, and the fiscal cliff approaching, Costco decided to add a payment of $7-per-share in addition to the regular quarterly cash dividend of 27.5 cents per share that the company announced on October 30…

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