Dividend Decisions: Costco's Unique Payout vs. Walmart's Stability

As consumer prices climbed 3.4% in August, investors may be looking more closely at income-generating assets to help not only offset higher prices but also for some portfolio protection.

The consumer goods sector can be a good starting point for finding dividend-paying companies, as these companies often have reliable cash flows that they can pass on to shareholders as dividends. In that space, both Costco Wholesale (NASDAQ: COST) and Walmart (NASDAQ: WMT) stand out, but for different reasons.

A quarterly payout and a special dividend

Costco pays a quarterly dividend, which yields 0.6% as of this writing. While the payout has been modest, the retailer also pays out occasional special dividends. Its most recent special dividend payout was $15 per share in 2024, while the one before that was $10 per share in 2020.

For that special dividend, however, there really isn't a set schedule that shareholders can rely on, as it's up to management's discretion whether and when one will be paid out.

Reaching Dividend King status

As a Dividend King, Walmart has increased its dividend payout annually for more than 50 years (53 to be exact). That means that during stagflation, inflation, war, economic uncertainty, and anything else thrown at Walmart at the time, it still reliably boosted its dividend payout.

Like Costco, Walmart's dividend payout isn't the largest, currently sitting at 0.9%. But there's also a reliability factor in those 53 years of consecutive payouts, which serves as a bonus.

I like both stocks, and I especially like Costco's ability to reward shareholders through three mechanisms: quarterly and special dividend payouts and stock price appreciation.

That said, I would still rather own Walmart between the two. Although the Walmart stock price is down around 3% so far in 2026, it's still evident in its Dividend King status that the retail giant can weather challenging times and continue paying out more to shareholders. Over the past 53 years of hiking its dividend payout, Walmart has ultimately offered shareholders seeking income peace of mind, and it can continue to do so.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.