Sterne Agee Sees Case For Higher Dividend Payout For Costco Wholesale

In a report published Wednesday, Sterne Agee analyst Charles Grom reiterated a Buy rating and $146.00 price target on Costco Wholesale Corporation (NASDAQ: COST).

In the report, Sterne Agee noted, “The structural advantages/consistency of the Costco model place the warehouse club operator in the upper echelon of a choppy retail space. To this end, with: (1) consistent/ membership fee (~77%) driven net income growth, (2) above-average FCF characteristics (post self-funding for store growth), and (3) an arguably underlevered balance sheet, the case can be made for a higher payout at Costco, which currently sits at only a 1.0% yield. Below and herein we examine the company's options, comparing COST to other consumer staple peers. Maintain Buy rating.”

Costco Wholesale closed on Tuesday at $143.06.