The amazing Costco at a stratospheric price! Quality should be expensive. We rate this rock solid company a solid “B+” for many reasons:
- Low payout ratio of 0.3, meaning the dividend is most likely secure
- Reasonable free cash flow growth of 9.3% per annum
- Great dividend growth rate of 12.7% per year
- Low debt-to-equity ratio of 0.6
- A high (which is good) Cash Flow to Forward Dividend Coverage ratio of 5.6
Sure the yield is low at 0.8%, but with a total return around 20% per year (based on 5 year average), we would say it’s worth it for this Growth Stock. While there is no special “buy” signal at the moment, it’s always a good time to add quality growth to a portfolio, especially those under 50 years young.
In these uncertain times, saving money and buying in bulk at Costco will be a family tradition for a long time.
What’s your view?