Purchasing a single share of Costco Wholesale at its initial public offering (IPO) would have resulted in the current number of shares you own.
Purchasing a single share of Costco Wholesale at its initial public offering (IPO) would have resulted in the current number of shares you own.
Costco Wholesale (COST dropping 0.64%) is quite the enjoyable shopping spot, offering its members economical goods. For an annual fee, customers appreciate the affordability of the items they desire. It also makes for an interesting investment opportunity. Posting impressive financial figures this year, its stock price recently hit an all-time high of $1,008.
Let's explore what an initial investment of just one share would yield (and its worth) if purchased on its initial public offering (IPO) on Dec. 5, 1985.
Transforming $10 into $5,748
Costco debuted at $10 per share during its IPO. Three subsequent stock splits saw one share multiplying into six shares, giving a post-split IPO price of $1.67. Presently, with a share price hovering around $958, an IPO purchase of a single share would be worth approximately $5,748.
Buying a single stock share back in the day was not the norm, as broker commissions generally ranged from $50 or more. However, the significant commissions for a $10 stock would have proven valuable, considering the future potential of the investment.
While the dividends wouldn't be substantial, an investor holding just one share would generate approximately $27.84 in yearly passive income. This income does not account for the occasional special dividend, with Costco distributing an additional $15 to shareholders in early 2024. By recouping the original investment, including commissions, multiple times through dividends since 2004, an investor would have significantly exceeded their initial investment.
Costco originated from Price Club, which opened its first store in 1976 and spearheaded the warehouse club concept. Its profit margins are so small that its quarterly membership fee revenue of $1.16 billion almost equaled its $2.2 billion operating profit in the last quarter. The number of members continues to grow, with over 77 million paid household members as of last quarter's end.
The stock currently trades at a historically high earnings multiple, so it might be wise to wait for a lower price to invest. However, Costco still harbors the potential to boost a share's value even further.
Investing in Costco Wholesale during its initial public offering in 1985, when it was priced at $10 per share, could have resulted in significant financial gains. If an investor had bought a single share at that price and accounted for the subsequent stock splits, the share's value would be approximately $5,748 today.
Despite the high current stock price, Costco's annual membership fee revenue often comes close to its operating profit, indicating its strong retail performance. This makes it an intriguing option for thoughtful finance-minded individuals interested in investing in the company's potential future growth.