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Costco Stock: What to Expect in 2022 (Maybe a Special Dividend?)

The Costco warehouse club has a history of making extra dividend payments.

Costco (COST) - Get Costco Wholesale Corporation Report never moves quickly because it does not need to be on the cutting edge of anything. The warehouse club has a membership-based model and as long as its retention numbers stay roughly the same and the company adds new members at a steady pace, nothing else really matters.

The company's members join for low prices and perks like Costco's prescription drug service, travel services, and lots of other values that the chain has made available to people who join. 

This isn't a company that needs to invest heavily in the latest tech. Instead, Costco sits back to see what other retail chains do and adds the services its members want most.

Costco evolves more than innovates, but that does not mean the company never changes. Over the past few years, the warehouse club has improved its online offerings, added a variety of delivery choices, and tweaked its memberships perks.

Don't expect any drastic changes in the coming year, but the company will continue to evolve and it has one trick up its sleeve that it may use once the pandemic ends.

What Does Costco Have Planned for 2022?

Costco plans to add e-commerce kiosks in more of its warehouses in the coming year, according to Chief Financial Officer Richard Galanti's remarks during the company's first-quarter 2022 earnings call in December.

"We're rolling out new e-comm kiosks in the warehouse, with video signage and easy touch-screen ordering. As well, we're rolling out e-commerce lockers. Currently, in the U.S., we have 112 locations with more -- and we plan to more than double that number during calendar year 2022," he said.

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Costco also raised its year-over-year capital expenditures in 2021 to $4 billion, compared with $3.6 billion in the previous year. Some of that went to international expansion while some went to logistics, and, of course, about 25 new U.S. warehouses opened. Galanti expects the capex number to stay in the $4 billion range.

"I think $4 billion sounds about right for the next year or two," he said. "And if things continue to go well, go well and grow well, maybe it goes up from there a little bit. But we're not looking to spend it if we don't think we have good things to spend it on."

Will Costco Pay a Special Dividend?

Costco has not hesitated to return cash to its shareholders. The company pays a regular dividend and it has paid a special dividend four times over the past decade or so. The last time the company made a special dividend payment was a $10-per-share payout made in December 2020.

The company funded that $4.4 billion expense from cash on hand.

Costco had roughly $12 billion in cash and cash equivalents on hand at the end of its most recent quarter.

Galanti has generally not been willing to comment on the timing of further special dividends. He did, however, address it during the earnings call.

"It's something that we've done four times in eight years. We, and the shareholders, seem to like it when we do it. And so I'm not trying to be cute, but we haven't made that decision at this juncture. It's probably a when, not if, but when will be when we do it," he said.