Lots of people “investing” in the market are looking for the “get rich quick” money so they chase IPO’s and other non-dividend paying stocks. While no dividend or very little dividend can mean the companies have lots of investment opportunities to grow their business quickly, it can also mean funds are wasted on perks for management at the investor’s expense. The key is to assess management and their abilities.
Costco has proven that they are a well-managed organization. Their fundamentals show this loud and clear for over 20 years. Management has snubbed Wall Street’s push for higher gross margins for years. By doing so, Costco has continued to benefit shareholders, customers and employees alike. Having a win/win situation is always best for continued growth and, for Costco, it has been paying off.
I recently read an excellent book called “The Good Jobs Strategy” that discusses how companies that pay their employees MORE still perform much better (not just profitability) than their competitors. Costco is one of the author’s primary examples. Trader Joes is another one that the author uses. When everyone wins, a company can grow by leaps and bounds. I would highly recommend the book for investors, as well as, managers. Happier employees equals better treated customers and much higher profits!
Costco has provided a number of special dividends over the years I held it- $10/Shr in 2020, $7/Shr in 2017, $5/Shr in 2015 and $7/Shr in 2012. This is in addition to their regular smaller dividend. I bought them in 2009 and just held. The beauty of this is that with the most recent dividend it has paid me completely for my original investment and the share value appreciated many times over.
So don’t chase those “get rich quick” stocks and IPO’s. Getting ahead slowly is much, much better and more likely to happen.
While it seems counterproductive, remember the child’s story where the tortoise always beats the hare. Steady as she goes…
Be smart, be well-read, be aware and be successful.
