Over the past 20 years, Costco ( COST ) has delivered more than 1,700% returns for investors, far exceeding the 420% return by the S&P 500 ($SPX). For the past 21 years, Costco has also paid a dividend, and then raises it every year.
Recently, COST stock rose above $1,000 per share, but after reporting fiscal second-quarter results, the stock fell back below the threshold, even though it beat earnings expectations. Is now the time to buy? The company’s journey from regional warehouse to global dominance underscores its ability to reward patient shareholders with investment appreciation and growing earnings, making the current moment a serious consideration for investors looking for quality retail exposure.
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Costco has been a good stock to buy at any time, whether shares are up or down. The stock’s long, steady upward trajectory means investors benefit no matter what they buy, because the business model continuously combines value through scale, efficiency, and member loyalty.
Short-term volatility rarely detracts from the bigger picture because Costco’s focus on delivering unbeatable value keeps customers returning and revenue flowing. Costco shares briefly dipped below $1,000 this month — opening at $996.50 on March 5 — but have already climbed above the $1,000 mark as of this writing. Market timers often think of entry points, but history proves that sticking through ups and downs has delivered market-beating results for decades.
The best recent buying opportunity for COST stock came this past December, when shares fell to their lowest levels in two years, offering a rare discount on a perennial winner. Those who got it right now are still locked in even more, yet anyone who bought in earlier is still sitting on significant unrealized gains today.
This flexibility stems from Costco’s disciplined approach to expansion, cost control, and relentless innovation in the member experience, which turns cyclical retail risk into potential long-term reward.
Costco released its fiscal Q2 earnings on March 5, and the results painted a picture of underlying strength despite some headline noise. Costco comfortably beat earnings expectations, reflecting tight cost management and healthy operating profits even amid widespread economic caution. Revenue came in slightly below consensus forecasts, a small decline that some observers attributed to soft discretionary spending patterns.
What really shined for the retailer, however, was strong growth in membership revenue, which accelerated nicely and highlighted the continued appeal of Costco’s offering. This fee income not only provides a higher margin cushion but also signals that members continue to see more value in the warehouse purchase format.
At the core of Costco’s sustainability sits its membership-based model, which offers significant stability and creates a steady stream of income that offers great visibility. Enjoying renewal rates close to 90%, the company benefits from exceptional customer retention that reduces churn and marketing costs while creating a self-reinforcing flywheel. Happy members renew, new members join, and fees are reliably collected.
This recurring revenue base acts as ballast during periods when general merchandise sales fluctuate, providing management with a clear line of cash flows for planning expansion or returning capital to shareholders. The model also limits losses due to theft by offering much lower prices than competitors such as Walmart ( WMT ) and Target ( TGT ). A cluttered warehouse layout, limited product selection, and quick inventory turnover deter opportunists and keep losses to a minimum, preserving margins that can then be passed on to members in the form of lower prices.
Combined with prudent balance sheet management—low profitability, strong free cash flow (FCF) generation, and conservative capital allocation—Costco maintains a strong financial foundation that supports continued growth without undue risk.
Investors who are attracted to dividend powerhouses especially appreciate how increasing annuity payments can turn a modest initial yield into meaningful income growth over time. Even at today’s high share price, the forward yield paired with steady upside offers inflation protection and upside potential that few peers can match.
There is never a bad time to buy COST stock, but there are some very good times every once in a while. While the current dip is nowhere near the December lows — and investors should grab shares with both hands when such instances occur — buying Costco stock near $1,000 is as good as ever.
The company’s proven ability to deliver superior long-term returns, coupled with its reliable dividend growth, makes it a fundamental holding for a portfolio built to last.
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As of the date of publication, Rich Dupree had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
