A Costco shopping cart is shown at a Costco Wholesale store in Carlsbad, Calif.MIKE BLAKE/Reuters
Costco Wholesale Corp., the largest U.S. warehouse-club chain, plans to return $2.2-billion to shareholders through the payment of a special dividend as it releases a swelling cash balance.
The $5 a share distribution will be funded from existing cash and additional borrowings, the Issaquah, Washington-based company said today in a statement.
The amount being returned is about equal to the company's net cash balance as of Aug. 31, the end of its last financial year, according to data compiled by Bloomberg. It's the first such payment by Costco since it handed back $3-billion to shareholders with a $7 a share distribution in December 2012.
"Our strong balance sheet and favourable access to the credit markets allow us to provide shareholders with this dividend, while also preserving financial and operational flexibility to grow our business globally," Chief Financial Officer Richard Galanti said in the statement.
Costco shares rose in German trading. The stock traded at the equivalent of $142.97 as of 9:53 a.m. in Frankfurt, up 1.7 per cent on yesterday's New York close.
The special dividend will be paid on Feb. 27 and is in addition to the regular quarterly dividend of 35.5 cents a share that was declared on Jan. 29, Costco said.