✦ What Twenty Billion Dollars Is ForNarrow moat

Costco Wholesale (COST) — the future bets

A buyback that does not shrink the share count and a history of enormous special dividends, from a company that has never made a large acquisition.

Costco's balance sheet has a problem most companies would like: it produces more cash than the business can absorb.

Capital returned and held ($M)$8,589MFY2024 dividends$2,183MFY2025 dividends$903MFY2025 buybacks$19,996MCash Q3 FY2026FY2024 included a $15-a-share special dividend of about $6,655M.
The buyback retires almost nothing — 943,000 shares in fiscal 2025, and the count still rose. The answer has always been an occasional enormous special dividend.

At the third quarter of fiscal 2026 the company held $18,946 million of cash and equivalents and $1,050 million of short-term investments against $5,670 million of long-term debt1. Operating cash flow was $13,335 million in fiscal 2025 against capital expenditure of $5,498 million2, and the fiscal 2026 capital plan of $6,000 to $6,500 million still leaves most of the year's cash generation unused.

The buyback is not the answer and has never pretended to be. Costco repurchased 943,000 shares in fiscal 2025 at an average price of $957.66, about $903 million3 — roughly 0.2% of the company — under a $4,000 million authorisation running to January 2027, with $1,359 million remaining at the third quarter4. Because equity compensation issues shares at a similar pace, the count actually rose over the year, from 443,126,000 to 443,237,000. Costco is one of the few large American companies whose share count has not fallen in a decade.

The ordinary dividend is deliberately modest: raised to $1.47 a quarter in April 2026 from $1.30, about $5.88 a year, a 0.64% yield. It consumes roughly a quarter of earnings.

The answer, historically, has been the special dividend. Cash dividends declared in fiscal 2024 totalled $8,589 million or $19.36 a share, including a special dividend of $15 a share that paid out approximately $6,655 million in a single transaction; fiscal 2025 declared $2,183 million or $4.92. Costco has done this repeatedly over the past fifteen years, at irregular intervals, in sizes large enough to matter.

That is the bet on this page, and it is not really about capital allocation. It is about restraint. A company holding twenty billion dollars is a company that could buy something, and Costco's record of not doing so is visible on the balance sheet: total goodwill across all three segments is $994 million5 against $77,099 million of assets, which is what a company that has never made a large acquisition looks like.

The cash balance is the whole tell. If it keeps compounding past $25 billion without a special dividend, the question changes from what the money is for to why it is still there.

Moat trajectory: Holding steady

Cash keeps building because the business cannot absorb it and Costco declines to acquire anything. The special dividend resets it periodically and changes nothing structural.

The number that tests this moat
Reported
Cash and short-term investments against long-term debt
$19,996M against $5,670M

The buyback retires almost nothing — 943,000 shares in fiscal 2025, and the count still rose. The historical answer has been an occasional enormous special dividend, $15 a share in fiscal 2024.

Source: Costco Form 10-Q, quarter ended May 10, 2026 ↗
References
  1. ReportedAt the third quarter of fiscal 2026 the company held $18,946 million of cash and equivalents and $1,050 million of short-term investments against $5,670 million of long-term debt.
    Costco Form 10-Q, quarter ended May 10, 2026 - condensed financial statements and notes (total revenue $70,527M, operating income $2,815M, diluted EPS $4.93, balance sheet, segment table, 928 warehouses) — Q3 FY2026 and the first 36 weeks · publ. June 3, 2026 · source ↗
  2. ReportedOperating cash flow was $13,335 million in fiscal 2025 against capital expenditure of $5,498 million, and the fiscal 2026 capital plan of $6,000 to $6,500 million still leaves most of the year's cash generation unused.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 7 MD&A (net sales $269,912M, membership fees $5,323M, gross margin 11.12%, SG&A 9.25%, comparable-sales composition, capital expenditure, dividends and repurchases) — FY2025 · publ. October 8, 2025 · source ↗
  3. ReportedCostco repurchased 943,000 shares in fiscal 2025 at an average price of $957.66, about $903 million — roughly 0.2% of the company — under a $4,000 million authorisation running to January 2027, with $1,359 million remaining at the third...
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 7 MD&A (net sales $269,912M, membership fees $5,323M, gross margin 11.12%, SG&A 9.25%, comparable-sales composition, capital expenditure, dividends and repurchases) — FY2025 · publ. October 8, 2025 · source ↗
  4. ReportedCostco repurchased 943,000 shares in fiscal 2025 at an average price of $957.66, about $903 million — roughly 0.2% of the company — under a $4,000 million authorisation running to January 2027, with $1,359 million remaining at the third...
    Costco Form 10-Q, quarter ended May 10, 2026 - MD&A (comparable sales +10% and +7% excluding fuel and currency, ticket +7% against frequency +2%, membership fees $1,373M, renewal 92.2% and 89.7%, gross margin 11.04%) — Q3 FY2026 and the first 36 weeks · publ. June 3, 2026 · source ↗
  5. ReportedA company holding twenty billion dollars is a company that could buy something, and Costco's record of not doing so is visible on the balance sheet: total goodwill across all three segments is $994 million against $77,099 million of...
    Costco Form 10-K, fiscal year ended August 31, 2025 - consolidated financial statements and notes (income statement, balance sheet, Note 11 segment reporting, disaggregated revenue by merchandise category, legal proceedings) — FY2025 · publ. October 8, 2025 · source ↗
Sources
Generated September 23, 2026