Costco Vs. Mcdonald's: Which Dividend Stock Is A Bet…
By Daniel Sparks – May 7, 2026 at 9:51PM EST
Key Points
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Costco’s April sales rose 13%.
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McDonald’s CEO warned that the consumer environment may be getting worse.
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Costco recently raised its dividend 13%, marking its 22nd consecutive annual increase.
Costco: growth that keeps surprising
The membership-based retailer just gave holders a fresh and impressive data point on Wednesday: April net sales rose 13% year over year to about $24 billion. Even more, total comparable sales climbed 11.6% over the four-week period.
Even after stripping out gasoline price changes and foreign exchange swings, and before backing out the roughly 1.5- to 2-percentage-point lift from an extra Easter shopping day, comparable sales still rose 7.8%. That’s an acceleration from 6.2% in March.
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NASDAQ: COST
Costco Wholesale
Today’s Change
(1.64%) $16.31
Current Price
$1012.06
Key Data Points
Market Cap
$449B
Day’s Range
$990.66 – $1012.66
52wk Range
$844.06 – $1067.08
Volume
2M
Avg Vol
1.8M
Gross Margin
12.93%
Dividend Yield
0.53%
And the trajectory remains strong when you zoom out. Costco’s net sales for the first 35 weeks of fiscal 2026 reached $197.18 billion — up 9.5%. And in the fiscal second quarter (the period ended Feb. 15, 2026), reported in early March, net income climbed nearly 14% year over year to $2.04 billion. Membership fee income during the period rose 13.6% in the quarter, with paid executive memberships up 9.5% to more than 40 million. That recurring membership fee stream is a big part of why Costco’s dividend looks so dependable — even at a low yield.
Speaking of the dividend: the warehouse club’s board approved a 13% increase to the quarterly payout in April, lifting it from $1.30 to $1.47 per . That marks 22 straight years of dividend hikes. Add in the company’s history of paying special dividends about every three to five years (the last one came in late 2023) and total cash returns over time look better than the headline yield suggests.
But there are some risks, starting with valuation. The stock trades at roughly 47 times forward earnings. And the worldwide membership renewal rate of 89.7% in fiscal Q2 was down from 90.5% in the same fiscal quarter of 2025 — a small slip, but one worth watching.
McDonald’s: a bigger yield, but slow business growth
The fast-food giant’s first-quarter results, reported Thursday, looked solid at first glance. Revenue rose 9% to $6.52 billion — though much of that came from foreign currency changes. In constant currencies, revenue grew just 4%. Net income climbed 6% to $1.98 billion, and non-GAAP (adjusted) earnings per reached $2.83, up just 1% in constant currencies.
Global comparable sales grew 3.8%, with the U.S. up 3.9% on positive check growth — helpful, but a far cry from Costco’s pace.
McDonald’s CEO Chris Kempczinski didn’t sugarcoat the backdrop on the earnings call. Asked about the consumer, he said, “I think probably it’s fair to say that […] it’s certainly not improving, and it may be getting a little bit worse.”
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NYSE: MCD
McDonald’s
Today’s Change
(-0.14%) $-0.40
Current Price
$283.70
Key Data Points
Market Cap
$202B
Day’s Range
$282.15 – $291.40
52wk Range
$282.15 – $341.75
Volume
6.6M
Avg Vol
3.4M
Gross Margin
57.29%
Dividend Yield
2.56%
The dividend story, however, does shine here.
McDonald’s pays $1.86 per quarterly, or $7.44 annualized, for that 2.6% yield. The company also bought back 1.3 million s for $393 million in the quarter. That’s a meaningful capital return profile.
But the stock isn’t quite the bargain it appears to be. Even after the recent slide (s are down about 8% over the past month), McDonald’s trades at about 23 times forward earnings, near its long-run average. And with management reaffirming a 2026 capital spending plan of $3.7 billion to $3.9 billion to support more than 2,000 net new restaurants, free cash flow may face some near-term pressure.
The verdict
Costco’s valuation is unforgiving, and its yield is tiny. But the gap between it and McDonald’s in terms of business momentum is substantial. The warehouse club is growing comparable sales roughly twice as fast as the burger giant.
Sure, McDonald’s offers steadier near-term cash returns and a much higher dividend yield. But the consumer weakness its CEO flagged this week could weigh on results before things improve. For investors with a long-term time horizon, Costco still seems to be the better dividend stock to buy — even at this price.
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About the Author
Daniel Sparks is a contributing Motley Fool stock market analyst covering technology, industrials, financials, and consumer goods. Daniel is the owner and chief investment officer of Sparks Capital Management. He holds a master’s degree in business administration from Colorado State University. The Globe and Mail profiled him and his investing philosophy in an article titled, “This stock picker is outperforming nearly everybody else. Here’s how he is doing it.”
Stocks Mentioned
Costco Wholesale
NASDAQ: COST
$1,012.06
(+1.64%)+$16.31
McDonald’s
NYSE: MCD
$283.70
(-0.14%)-$0.40
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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