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Costco is doing something no other retailer has been able to do in more than a year

  • Costco announced a special cash dividend of $7 per common share.
  • The last S&P 500 retailer to pay a special dividend was Best Buy in February of 2016.
  • Shares are up more than 7.5 percent year-to-date, outperforming the S&P 500.

Costco shareholders are about to get a nice payout and a rare one from a retailer.

The wholesale retailer who has ducked the woes of most other brick-and-mortar stores announced Tuesday a special cash dividend of $7 a share, along with a 5 cent increase of its quarterly cash dividend to 50 cents a share.

Shares closed up more than 2 percent on Wednesday. The last retailer in the S&P 500 to pay a special dividend was Best Buy in February of 2016, according to S&P Capital IQ. And that was just a meager 45 cents.

The special payout on common stock by Costco will be paid on May 26 to shareholders of record at the close of business May 10. The total payment of about $3.1 billion will be primarily funded through additional borrowings, Costco said in a release.

Costco shares year-to-date performance

Source: FactSet

"Our strong balance sheet and favorable access to the credit markets allow us to provide shareholders with this dividend, while preserving financial and operational flexibility to continue to grow our business globally," Richard Galanti, executive vice president and chief financial officer, said in the release.

There has only been one other special dividend this year by a company in the S&P 500, according to S&P Capital IQ's database. Ford announced one in January.

As of Wednesday's close, Costco shares are up 10.42 percent for the year so far, versus the S&P 500's 6.64 percent return over that time.