A Costco Special Dividend Could Be Coming, but Walmart Has Raised Its Dividend for 53 Consecutive Years. Here's the Better Buy Now.
Costco has a history of making huge one-time dividend payments, but you can't count on those dividends to pay the bills.
Overview
Most investors buy dividend stocks to create a reliable income stream to pay bills. Costco (NASDAQ: COST) and Walmart (NASDAQ: WMT) are both reliable dividend stocks. But they have taken dramatically different approaches with their dividends. For most, Walmart and its roughly 0.9% yield will be a better fit than Costco's 0.6% yield. Here's why.
Before getting into the relative merits of Walmart and Costco and their dividend policies, it is important to address the value equation. Neither of these globally dominant retailers is cheap right now. Each company's price-to-sales and price-to-earnings ratios are above their five-year averages. And their yields are both below that of the S&P 500 index (SNPINDEX: ^GSPC). If valuation is important to you, you'll probably want to keep these stocks on your wish list.
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Originally published at www.fool.com.