If You'd Invested $1,000 in Costco Stock 20 Years Ago, Here's How Much You'd Have Today
Key Points
Costco has made many investors a lot of money -- especially if they reinvested their dividends.
The stock isn't a screaming bargain, but it could still serve long-term investors well.
July 2006 was just 20 years ago -- Tiger Woods won the British Open and Taylor Swift's debut album was still months away from being released. Were you investing then? If you invested $1,000 in Costco Wholesale (NASDAQ: COST) stock and kept it, then here's how you would have done.
Your $1,000 stake in the company would have grown to $17,790. If you'd invested that $1,000 in the S&P 500 index instead, you'd have ended up with $6,030.
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But hold on -- Costco is a dividend-paying stock, recently yielding 0.64%. That may not seem like much, but Costco also pays hefty "special" dividends every few years, most recently paying $15 per share in 2024.
What if you'd reinvested your dividends in more shares of Costco throughout your two decades of ownership? Well, then, your $1,000 would have grown to $26,130, while the total return of the S&P 500, including dividends, would be $8,832. This is a great reminder that reinvesting dividends is a solid wealth-boosting move.
Should you invest in Costco now?
Looking at various valuation metrics, the stock seems fairly valued to slightly overvalued these days. Its forward-looking price-to-earnings (P/E) ratio is 41.7, a smidge above its five-year average of 41.6%. And its price-to-sales ratio was recently 1.4, above its five-year average of 1.2.
Lofty valuations can be reasonable when a company is growing briskly, and Costco is indeed growing. In its third quarter of fiscal 2026, revenue jumped 12%, while net income rose 15%.
Costco isn't a clear screaming bargain at current levels, but it is likely to keep growing over the coming years, rewarding shareholders. If you buy now and plan to hang on for years, if not decades, you'll likely do well. For a chance at greater gains and more of a margin of safety, you might wait for a lower price.
Selena Maranjian has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.