'Dividend Fatigue' Strikes Costco


Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

It's a good time to be a member of the wholesale club's stock family, but not so much to become one, writes MoneyShow's Jim Jubak, also of Jubak's Picks.

A very subdued reaction to a very solid earnings report from Costco Wholesale (COST) today. Maybe it's special dividend fatigue.

Costco's earnings for the quarter that ended on November 25 (and yes, Costco's quarters are out of sync with just about every other retailer) rose 30%, to 95 cents a share from 73 cents in the same quarter of 2011. Wall Street had been predicting earnings of 93 cents a share.

The stock climbed 0.18% to $98.49 as of noon New York time. (The stock is a member of my Jubak's Picks portfolio.)

These earnings come after the announcement of a special $7 a share dividend. That news popped the stock, but shares then gave it all back-as financial theory suggests they should have-on December 6, the record date for the dividend.

Investors who had already qualified for the dividend by owning shares on that day sold, and the stock fell $7.48 a share-or 7.06%. It closed the day pretty much where it had been before the special dividend news.

But Costco's stock doesn't usually move very much on earnings reports in any quarter, since the company releases most of the really important data before the earnings report itself.