With fears of recession, keep an eye on Costco Wholesale (COST).

With a dividend yield of 0.61%, Costco sells the types of products that consumers need, no matter how well or how poorly the economy is doing. After all, even in times of chaos, consumers need food, soap, toothpaste, toilet paper, etc. Costco also just raised its dividend.

According to the company: “Costco Wholesale Corporation announced that its Board of Directors has declared a quarterly cash dividend on Costco common stock and approved a quarterly increase from 79 to 90 cents per share, $3.60 on an annualized basis. The dividend is payable May 13, 2022, to shareholders of record at the close of business on April 29, 2022.”

Earnings have been just as solid. For its second quarter, Costco saw EPS of $2.92 on sales of $51.9 billion, which was better than expectations for EPS of $2.76 on sales of $51.53 billion.

In addition, as reported by Barron’s: “‘Near-term, the market may be underestimating the strength of Costco’s position with higher inflation,’ wrote Jefferies analyst Stephanie Wissink, given that the overall results confirmed the company’s ability to handle this and other supply-chain related headwinds. She has a Buy rating and $650 target on the stock.’”

Even better, analysts seem to love the Costco stock.

  • Evercore ISI raised the target on Costco to $610 from $605, with an outperform rating
  • Truist raised its price target on Costco to $634 from $603, with a buy rating
  • Deutsche Bank raised its target price to $527 from $491, with a hold rating
  • Loop Capital raised its target to $645 from $605, with a buy rating
  • Oppenheimer raised its target to $645 from $620, with an outperform rating

Over the last few months, shares of COST ran from a low of about $450 to $610. After a slight pullback to $590.40, we’d like to see the stock up to $650 per share in the longer term.

— Ian Cooper

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Source: Investors Alley