Costco Wholesale Corporation (COST): This Wholeseller Is Still a Good Investment

Costco Wholesale Corporation (NASDAQ:COST)’s great customer service might come from the high employee salary.  The average Costco employee makes roughly $45,000 a year.  This is much more than the average Sam’s club employee salary of $17,500 a year and Target Corporation (NYSE:TGT) cashiers’ hourly wage of $8.07.

Target Corporation (NYSE:TGT), Wal-Mart Stores, Inc. (NYSE:WMT), and Costco have gross margins of 30.70%, 24.66%, and 10.67 respectively. It would appear that Costco falls behind in this category, but Costco doesn’t see it that way. By lowering their prices they increase sales, member shopping frequency, membership sign ups and renewals, and market share. Having small margins is a byproduct of these low prices, but the positives outweigh the negatives.

Costco Wholesale Corporation (NASDAQ:COST) has a smaller dividend yield of 1.10% compared to Target Corporation (NYSE:TGT) and Wal-Mart’s yields of 2.50% each. While the annual yield might be smaller, Costco gave a special dividend of $7 per share last December showing that the company is more than willing to compensate its investors generously.

Conclusion

Costco Wholesale Corporation (NASDAQ:COST) is a strong company that continues to grow thanks to membership increases and global store expansion. Costco’s growth over a long period of time is reliable.  It is a solid brand that offers consumers high-quality goods and inspires pride in its employees.  The stock won’t shoot up dramatically like a hip tech stock, but it will give a patient investor a good return in the long run.

Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool owns shares of Costco Wholesale Corporation (NASDAQ:COST).

The article This Wholeseller Is Still a Good Investment originally appeared on Fool.com.

Ben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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