History Says This Is the Amount of Yearly Dividend Income a $20,000 Investment in Costco Stock Could Generate By 2036 (Without Even Considering Special Dividends).
2026-09-26 12:15
•Reuben Gregg Brewer •The Motley Fool
••••• • Axe Cap view
What Costco’s Dividend Growth Means for South African Income Seekers
Costco’s steady double-digit dividend increases highlight lessons for JSE investors chasing reliable income growth.
Costco, a global retail powerhouse, has increased dividends by 11-14% annually for over a decade. This kind of compounding dividend growth can turn a modest investment into a meaningful income stream over time. While we don't have a direct equivalent on the JSE, the principle resonates with South African income investors, especially those watching MTN or Shoprite for stable dividends. The USD/ZAR rate adds another layer—if the rand weakens against the dollar, offshore dividend payers like Naspers and Prosus could become even more attractive, as their US dollar-linked earnings translate into higher rand returns. However, South African companies historically don’t grow dividends as fast as Costco, partly due to economic and regulatory challenges. Still, households and pension funds should consider dividend growth stocks overseas with currency benefits, while domestically favoring resilient sectors like retail and telecoms that can sustain payouts. If the rand surprises on the upside or local inflation pressures ease, the relative appeal of USD-based dividend payers may soften. this is just our opinion and not financial advice
I would start by watching Shoprite and MTN for dividend stability locally, and consider gradually adding offshore dividend growth stocks via rand-hedged structures to capture compounding income potential boosted by weaker ZAR. Trim exposure if the rand strengthens sharply or inflation subsides faster than expected.
- USD/ZAR
- Shoprite
- MTN
- strong rand appreciation reducing offshore dividend gains
- domestic economic slowdown hitting local dividend payers
6/10
A $20,000 investment in Costco today would purchase 22 shares generating approximately $129 in annual dividend income. Based on Costco's historical dividend growth rate of 11-14% annually over the past decade, this dividend income could grow to between $330-$420 by 2036, more than tripling the initial yield. The analysis excludes special dividends that Costco regularly pays, which could further enhance returns.
Our take is based on reporting first published by The Motley Fool.