Costco to pay $7 special dividend on December 18
November 29, 2012 2:14 AM EST
Retailer Costco Wholesale Corp
The retailer also posted monthly same-store sales that beat analysts' expectations.
Shares of Costco, which charges a membership fee to let people shop at its stores for deals on everything from paper towels to diamond rings, rose 5.4 percent, or $5.10, to $101.68 in early trading.
Several companies have declared one-time cash dividends in recent days ahead of a likely increase in the dividend tax rate due to the so-called "fiscal cliff" - a combination of tax increases and spending cuts due to kick in at the beginning of next year if Congress and the White House cannot reach an agreement on a new deficit cutting plan.
Among those, spirits company Brown-Forman Corp
"We expect many cash-rich, stable operating companies to follow this trend, along with companies that have high insider ownership," Janney Capital Markets analyst David Strasser said.
Costco had cash and short-term investments of about $4.8 billion on September 2, and the access to credit markets to make such a large payout.
"Our strong balance sheet and favorable access to the credit markets allow us to provide shareholders with this dividend," Chief Financial Officer Richard Galanti said in a statement on Wednesday.
On November 19, Costco's bigger rival Wal-Mart Stores
Costco's special dividend will be paid on December 18, with the record date set at December 10.
November sales at Costco stores open at least a year rose 6 percent, helped by higher gasoline prices and dollar weakness, the company said. That compared with a forecast for 5.4 percent, according to Thomson Reuters data.
Excluding the effects of fuel and currency, Costco posted a November same-store sales increase of 5 percent. Net sales rose 9 percent to $8.15 billion in the four weeks to November 25.
(Reporting by Sakthi Prasad and Brad Dorfman; Editing by Dan Lalor and Maureen Bavdek)
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