Who couldn’t use a little more cash around the holidays?
I know here at the Scheidt house, expenses tend to pick up around this time of year.
It’s not just the gifts we buy for the kids.
There’s also the expense of driving to see family or new holiday clothes for the little ones who keep growing out of last year’s outfits.
And the grocery bills seem to go up as we buy special snacks and treats for the holidays.
Chances are, you’re seeing some similar expenses at your house this year.
Even with the coronavirus crisis, we’re still spending more on ourselves and our loved ones and trying to enjoy the holiday season as best we can.
That’s why I was so happy to see one of my favorite retail companies paying a monster dividend to investors!
This one stock has announced a special dividend thirteen times bigger than its normal quarterly payment.
What a great gift to shareholders at this time of year!
And the exciting thing is, this payment could be just the start of things to come as corporations start to think about what to do with massive cash balances.
Today, I want to show you how to get in on this upcoming special dividend. And I’ll also explain which other stocks are the most likely to give you extra income in the months ahead!
Costco’s $4.4 Billion Holiday Gift
Earlier this month, Costco Wholesale Corp. (COST) announced a special dividend of $10 per share.
The dividend is more than 13 times the size of its normal quarterly dividend of $0.70. Adding up all the payments to investors, this special dividend will cost Costco $4.4 billion.
If you buy shares before Dec. 2, you’ll receive this special dividend payment in your investment account along with all future dividends from COST for as long as you hold your shares.
Given the retailer’s popularity both before and during the coronavirus crisis, Costco has proven itself to be a reliable and profitable income play for retirees!
The special dividend comes as a result of the massive cash balances that COST has been accumulating. The company has a history of accumulating profits consistently and then paying special dividends to investors once cash balances become quite large.
As you can see in the chart below, the cash balance for COST has more than tripled to $12.3 billion over the last few years.
And even after paying its special dividend to investors, COST will still have roughly $8 billion in the bank.
So don’t be surprised to see the company raise its normal quarterly dividend and potentially set up another special dividend in the not-too-distant future.
Searching for Future “Special Payments”
Some of the biggest dividend-paying companies that we’ve been tracking are now sitting on huge hoards of cash.
- Wal-Mart is sitting on a $14.3 billion cash balance.
- Microsoft has accumulated $17.2 billion.
- And Apple Corp. now has more than $190 billion in cash!
Investors love it when companies have enough cash to cover expenses and to get through a rough time in the economy.
And for dividend-paying companies, it’s important to hold extra cash so the corporation can continue with its normal quarterly payments even if business goes through a rough patch.
But too much cash on hold is simply a waste!
Since interest rates are so low, the companies aren’t earning any income on the extra cash parked in the bank. And as investors, aren’t getting any extra benefit from this cash.
That’s why I expect to see many of our dividend companies take a page out of Costco’s playbook in the year ahead.
Once the coronavirus crisis begins to pass, these companies will have weathered the economic storm with plenty of extra reserves.
And as profits begin to pick up again, the cash reserves will continue to grow.
Investors will pressure management teams to do something with the cash.
And that pressure will lead to more special payments like the one Costco is treating investors to next month.
As always, my team and I will be scouring the markets for these opportunities and letting you know about the best income plays with the potential for extra payments.