Investors searching for dividend income may be tempted to focus on stocks offering the biggest yields today. Yet Visa, S&P Global and Costco show how a smaller initial payout can become more valuable when a company consistently raises its dividend. Strong cash generation and growing businesses give all three room to return more money to shareholders over time.
Small yields, steady growth
Visa currently pays a quarterly dividend of $0.67, equal to $2.68 annually, after steadily increasing its payout for years. The payment stood at $0.45 in late 2022 before rising to $0.52, $0.59 and eventually its current level.
S&P Global offers another example of the strategy. Its quarterly dividend increased to $0.97 this year, giving shareholders an annualized $3.88 payout. The company has paid dividends every year since 1937 and has increased them annually for more than 50 years.
Costco has followed a similar path, raising its quarterly dividend to $1.47 this year. That brings the regular annual payout to $5.88, while shareholders have occasionally received much larger special dividends as the retailer returns excess cash.
Growth changes the math
Costco’s approach could soon attract particular attention. Analysts are watching for another possible special dividend when the retailer reports fiscal fourth-quarter results on September 24, although no such payment has been announced.
Its previous special dividend was $15 per share, paid in January 2024. Behind the regular payout, Costco continues to expand sales. June net sales rose 10.6% year over year to $29.24 billion, while digitally enabled comparable sales climbed 20.9%.
Dividend yield alone does not reveal how much income an investment could eventually produce. Companies capable of repeatedly increasing smaller payouts can give long-term shareholders rising income, although future dividend increases are never guaranteed.
