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Costco (COST) and Walmart (WMT) are both high-quality retailers, but neither is automatically the better long-term stock. Costco offers faster recent sales growth, higher return on invested capital, net cash and a membership-led profit model; Walmart offers a lower earnings multiple, a higher regular dividend, more diversified profit streams and a longer dividend-increase record. At mid-November 2026 prices, both trade at unusually large premiums to staples-retail peers, so the right choice depends on whether you prioritize growth quality, income, valuation or balance-sheet strength.
The comparison below uses dated figures because the companies have different fiscal calendars: Costco’s fiscal 2026 ended August 30, 2026, while Walmart’s fiscal 2027 ends January 31, 2027. Prices and market data are snapshots from November 11–13, 2026, not live quotes.
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| Name | Best for | Key spec | Platforms | Checked |
|---|---|---|---|---|
| Costco (COST) | Investors seeking membership economics, higher ROIC and net cash | About 53x trailing P/E; 21.7% ROIC; regular yield about 0.5% | Nasdaq | November 2026 |
| Walmart (WMT) | Investors seeking broader diversification, income and a lower multiple | About 45–46x trailing P/E; 16.1% ROIC; regular yield about 0.8% | Nasdaq | November 2026 |
Which stock is better for a long-term investor?
There is no official winner. Costco is the stronger fit for an investor who values recurring membership revenue, faster sales growth, higher capital returns and a net-cash balance sheet. Walmart is the stronger fit for an investor who wants a larger and more diversified retailer, a lower (though still expensive) valuation, a higher regular yield and a much longer dividend-growth streak.
Business Quant’s November 12 comparison put Costco’s trailing P/E at 52.6 times and Walmart’s at 45.5 times, versus an 18.5-times median for staples-retail peers. Their enterprise-value-to-EBITDA multiples were 32.7 times and 22.0 times, compared with a 9.8-times peer median. Those premiums are the central risk in both stocks: excellent businesses can still deliver poor returns if growth slows and the valuation contracts.
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The companies trade on Nasdaq. A November 12 snapshot showed Costco around $1,092 and Walmart around $126; both had gained roughly 20% over the prior year. Market capitalization was approximately $489 billion for Costco and $1.00 trillion for Walmart on that source’s print, although other same-week snapshots put Costco closer to $484 billion. Treat those as ranges, not precision measurements.
How do the two business models differ?
Costco is a membership warehouse whose low merchandise markups are designed to make the annual fee valuable. Walmart is a mass retailer whose stores and Sam’s Club underpin faster-growing businesses such as marketplace, advertising, e-commerce and paid memberships.
Costco’s membership flywheel
Costco ended fiscal 2026 with 939 warehouses, 84.1 million paid members and 150.4 million cardholders. Executive members numbered 42.3 million, up 9.4%, faster than total paid members, which rose 3.8%. Renewal was 92.3% in the United States and Canada and 89.8% worldwide. Those rates make membership fees unusually predictable: TIKR reported about $5.9 billion of fiscal 2026 membership fees, roughly half of operating income.
Chief executive Ron Vachris said, “Our membership continues to be the most important item we sell.” Costco’s fiscal 2026 sales rose 10.1% to $297.2 billion. Digitally enabled sales, including third-party delivery, exceeded $33 billion and grew more than 20%, according to the September 24 earnings-call transcript.
The model also depends on customer trust in value. Chief financial officer Gary Millerchip said Kirkland Signature products generally save 15% to 20% versus comparable national brands at equal or better quality. Costco estimated that its fuel prices saved members more than $3.2 billion versus average pump prices in its markets during fiscal 2026. Those benefits support renewal, but they also mean Costco must protect value rather than simply maximize product margins.
Walmart’s broader profit pool
Walmart combines U.S. stores, Sam’s Club, international retail, e-commerce, a third-party marketplace, Walmart Connect advertising, VIZIO-related activity and Walmart+ membership. On the August 20 fiscal Q2 2027 call, CEO John Furner described “a strong retail foundation alongside faster-growing businesses like Marketplace, advertising, and membership.”
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallConstant-currency net sales grew 5% in that quarter. Walmart U.S. comparable sales rose 2.6%, Sam’s Club U.S. comps 4.4% and international sales 7.9%. Global e-commerce grew 23%; Walmart U.S. e-commerce grew 24%, marketplace 52% and advertising 38%. U.S. e-commerce had exceeded 20% growth for ten consecutive quarters. Membership fee revenue reached an all-time high on 17% growth, and Walmart+ grew at a double-digit rate. A 125-basis-point drug-price-regulation effect reduced Walmart U.S. comps, so the headline 2.6% should not be read without that context. The published call transcript also records adjusted operating-income growth of 17.4% and adjusted EPS growth of 19%.
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Sam’s Club is important in a COST-versus-WMT decision. Walmart gives investors a warehouse-club business, but it is only one component of a much larger company. Marketplace, ads and membership can grow faster than store sales, while the stores provide customer traffic and fulfillment capacity.
Which company is growing faster and with better economics?
Costco leads on recent sales growth and return on invested capital. Walmart has compounded operating income, net income and EPS faster over three years, although its free cash flow declined over that period.
| Trailing metric | Costco | Walmart |
|---|---|---|
| Revenue | $303.15 billion | $735.84 billion |
| One-year revenue growth | 10.1% | 6.2% |
| Three-year revenue CAGR | 7.8% | 5.3% |
| Operating margin | 3.9% | 4.4% |
| Free-cash-flow margin | 3.1% | 1.8% |
| ROIC | 21.7% | 16.1% |
| Return on equity | 26.6% | 21.9% |
| Free cash flow | $9.38 billion | $13.51 billion |
Prices checked November 2026.
These are Business Quant trailing compilations aligned with the November 12 price date. Costco’s lower gross margin, 12.8% versus Walmart’s 25.2%, is not evidence that Walmart has the superior model. Costco intentionally sells at a low markup and captures economics through fees and volume. Compare returns on capital and cash generation instead.
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Costco’s fiscal 2026 operating cash flow was $15.825 billion and net income was $9.226 billion. Its fourth quarter produced $93.87 billion of sales, up 11.2%; comparable sales rose 6.7% excluding gasoline and foreign-exchange effects, traffic increased 3.3% and digitally enabled comps grew 19.8% on an FX-adjusted basis. A $0.15-per-share tariff-refund benefit affected quarterly EPS; excluding that non-recurring item, net income grew 12.3% and EPS 12.4%, as Millerchip explained in the company’s 2026 filings.
Early fiscal 2027 momentum remained strong. MarketBeat, citing Costco’s sales release, reported $54.52 billion of sales in the first nine weeks, up 12.8%. October comparable sales grew 7.3% excluding gas and currency, traffic rose 3.3% and digitally enabled sales increased 22.5%. The phrase “nine-month” appearing in that article conflicts with the dollars; nine weeks is the economically consistent period.
Walmart’s three-year operating-income CAGR was 14.0% versus Costco’s 12.9%, and its three-year EPS CAGR was 16.9% versus 13.6%. However, Walmart’s three-year free-cash-flow CAGR was negative 11.1%, while Costco’s was positive 11.6%. Walmart says automation, delivery and marketplace investment are building future profit pools, but the retrieved material does not provide a capex bridge that quantifies how much of the cash-flow decline is investment versus operating performance.
Which balance sheet is safer?
Costco has the cleaner balance sheet before its special dividend. Business Quant reported net debt to EBITDA of negative 1.1 times for Costco, meaning net cash, versus 0.8 times for Walmart. Debt-to-equity was 0.2 versus 0.5, interest coverage 80.6 times versus 17.4 times, and debt-to-free-cash-flow 0.7 times versus 3.7 times. Costco held $20.21 billion of cash and $6.16 billion of debt; Walmart held $11.53 billion of cash and $50.41 billion of debt.
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Costco’s board declared a $30-per-share special dividend, approximately $13.3 billion in total, payable December 4, 2026, to shareholders of record at the close of business November 24. That payment uses a substantial portion of the August cash balance but does not represent a leveraged recapitalization. Planned fiscal 2027 capital spending is about $7.5 billion, with 33 openings, including five relocations, toward roughly 30 net new warehouses a year. Operations and additional tariff refunds will change the cash balance before payment, so do not publish a made-up post-dividend leverage ratio.
The special dividend is double Costco’s prior $15 special. Sources disagree whether that prior payment should be dated December 2023 or 2024 because declaration and payment dates differ; the amount is not in dispute. Costco also reauthorized up to $4 billion of buybacks through November 2030. TIKR reported that fiscal 2026 repurchases of $847 million were below $924 million of stock-based compensation, so the regular program did not fully offset dilution.
How expensive are COST and WMT?
Walmart is cheaper on earnings and enterprise value; Costco is cheaper on free cash flow. Both are expensive relative to their industry.
| Valuation measure | Costco | Walmart | Staples-retail median |
|---|---|---|---|
| Trailing P/E | About 53x | 45.5x | 18.5x |
| EV/EBITDA | 32.7x | 22.0x | 9.8x |
| P/FCF | 51.6x | 74.1x | 14.8x |
| P/S | 1.6x | 1.4x | 0.5x |
| PEG using three-year EPS CAGR | 3.86 | 2.69 | 1.08 |
The Costco P/E appears as 52.6x in Business Quant’s detailed table, 53.0x in its header and 52.96x in a November 13 MarketBeat quote. “About 53 times” avoids false precision. Walmart’s 45.5x is still roughly 2.5 times the peer median. A Fair Value Calculator model dated November 11 placed both stocks about 60% above its own modeled fair values, which shows that one model found no valuation winner; it does not establish that either stock is objectively 60% overvalued.
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Costco’s P/FCF of 51.6x is below Walmart’s 74.1x, so Costco offers the higher free-cash-flow yield on that definition even though its P/E is higher. TIKR separately described Costco at about 47 times forward earnings versus a roughly 37-times ten-year average and warned that a reversion could reduce the share price even if estimates hold. Forward figures differ by vendor and fiscal-year labeling; Walmart’s comparison column was mislabeled as fiscal 2026 despite the company already being in fiscal 2027. Do not treat any single forward-EPS path as consensus.
Which stock is better for dividends and retirement income?
Walmart wins for dependable current income; Costco wins for occasional large distributions and has the lower regular payout ratio.
| Dividend measure | Costco | Walmart |
|---|---|---|
| Regular annual dividend | $5.88 | $0.99 |
| Indicated regular yield | About 0.54% | About 0.80% |
| Income on $10,000 at cited yields | About $54 yearly | About $80 yearly |
| Earnings payout | High-20s percentage | About 35% |
| Increase streak recorded by REWD | 20 years | At least 50 years |
Costco raised its quarterly dividend from $1.30 to $1.47 in April 2026 and declared another $1.47 payment in October. The regular dividend is real; an erroneous comparison FAQ claimed Costco paid none. The $30 special is not an annual yield. At roughly $1,090 per share it equals about 2.7% of the price, but it is a one-time 2026 cash event and the share price normally adjusts downward by approximately the distribution on the ex-dividend date, all else equal.
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REWD’s five-year Costco dividend CAGR of negative 15.3% is distorted by a special dividend entering or leaving the measurement window. It is not a cut to the regular rate and should not be compounded into a forecast. REWD recorded Costco’s three-year dividend growth at 13.0% and ten-year growth at 12.6%; Walmart’s corresponding figures were 9.0% and 4.0%. For an income plan, model regular dividends separately from specials.
What do long-term returns say?
Past performance changes depending on the holding period and whether dividends are included. Business Quant’s price-only annualized returns through November 12 were:
| Period | Costco | Walmart | S&P 500 proxy |
|---|---|---|---|
| 1 year | 19.5% | 22.0% | 10.8% |
| 3 years annualized | 23.6% | 31.2% | 19.8% |
| 5 years annualized | 16.1% | 20.7% | 10.1% |
| 10 years annualized | 22.0% | 18.2% | 13.3% |
PortfoliosLab’s dividend-adjusted series shows the same shape: Costco led over ten years, while Walmart led over one, three and five years. The sources report one-year volatility near 20.4% for Costco and 26.9% for Walmart. A five-year maximum drawdown was about 31.5% for Costco and 26.0% for Walmart. These are historical statistics, not forecasts, and the decade-long returns were earned from very different starting valuations.
The stocks’ one-year daily-return correlation was about 0.64–0.66, so holding both can diversify company-specific risks but does not remove exposure to household spending, wages or the U.S. consumer. TIKR’s five-year beta calculations were 0.85 for Costco and 0.53 for Walmart; short-window negative beta figures from another vendor should not be interpreted as a structural market hedge.
Who should lean toward Costco?
- Membership-economics investors: Renewal rates above 89% worldwide and growing Executive membership support recurring fee revenue.
- Growth-focused investors: Costco’s recent sales growth, traffic, digital sales and free-cash-flow growth exceed Walmart’s on the cited trailing measures.
- Balance-sheet conservators: Costco starts with net cash, much lower debt ratios and greater interest coverage.
- Investors comfortable with lumpy cash returns: The regular yield is low, but special dividends can be substantial.
The trade-off is valuation. Costco is more expensive on P/E and EV/EBITDA, and its next fiscal quarter will no longer receive a year-over-year boost from the September 2024 membership-fee increase. Paid-member growth also slowed from 5.2% in fiscal Q1 2026 to 3.8% in fiscal Q4, making renewal and organic comp trends important.
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Who should lean toward Walmart?
- Income-oriented investors: Walmart’s regular yield is higher and its dividend-increase record is far longer.
- Valuation-conscious investors: Walmart is cheaper on P/E and EV/EBITDA, although still far above peer medians.
- Diversification seekers: Stores, Sam’s Club, international retail, marketplace, advertising and memberships provide multiple growth engines.
- Investors comfortable with reinvestment: The weaker three-year free-cash-flow trend may reflect heavy spending on automation, delivery and digital infrastructure.
Walmart’s trade-offs are greater leverage, a lower P/FCF yield and a business whose strongest new profit pools still need to scale without weakening retail economics. The August guidance raise did not include a numeric range in the retrieved transcript, so May’s superseded guidance should not be quoted as current.
When might owning neither be reasonable?
An investor whose rule is to buy retailers near peer valuations may reasonably wait. Both stocks are priced for durable execution: Costco must sustain renewals, traffic and gas-adjusted comps, while Walmart must sustain marketplace, advertising, membership and e-commerce growth. A slowdown in those metrics could cause the multiple to contract before the business looks weak in absolute terms.
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Prices can also be distorted around Costco’s special dividend. The November 24 record date and December 4 payment date should be separated from ordinary performance. Costco’s fiscal Q1 2027 results are due December 10; MarketBeat cited aggregator expectations of roughly $74.35 billion in revenue and about 13% EPS growth, but those are not company guidance. Compare organic comps excluding gas and currency and identify the effect of tariff refunds rather than judging the quarter by reported EPS alone.
How should an investor make the final choice?
- Set the objective. Choose growth and balance-sheet quality, regular income, valuation discipline or a combination.
- Use comparable operating measures. For Costco, emphasize renewal rates, traffic and comps excluding gas and currency. For Walmart, track comparable sales, e-commerce, marketplace, advertising and membership growth.
- Separate regular and exceptional cash returns. Count Costco’s $5.88 annual dividend as recurring; treat the $30 special as a one-time distribution.
- Check the price paid. Compare each P/E and EV/EBITDA with the 18.5-times and 9.8-times peer medians, not just with each other.
- Match the fiscal periods. Costco’s fiscal 2026 is the year ended August 30, 2026; Walmart’s fiscal 2027 ends January 31, 2027.
- Reassess concentration. Owning both reduces company-specific risk somewhat, but both remain exposed to consumer spending and retail labor costs.
COST and WMT are bought through a brokerage account, not from the companies. This article is informational, not investment, tax or financial advice; dividend record dates and the tax treatment of special distributions require individual advice.
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The ranking framework follows the issues that most affect a long-term decision: growth quality rather than fuel-inflated sales, return on invested capital and free-cash-flow conversion, the source of operating profit, valuation versus staples-retail medians, regular and special capital returns, balance-sheet risk, and returns over multiple horizons. No regulator, company filing or official study declares one stock superior for every investor.
Frequently Asked Questions
Does Costco’s $30 special dividend make its yield higher than Walmart’s?
Only temporarily and only as a one-time cash payment. Costco’s recurring annual dividend remains $5.88, producing a yield of roughly 0.5%; the $30 distribution should not be annualized or used to compare ordinary retirement income.
What happens to COST on the special-dividend ex-date?
All else equal, the share price typically adjusts downward by approximately the dividend amount when the stock goes ex-dividend. A chart can therefore show a sharp drop that is largely mechanical rather than a change in Costco’s operating value.
Are Costco and Walmart in the same fiscal year when comparing earnings?
No. Costco’s fiscal 2026 ended August 30, 2026, while Walmart’s fiscal 2027 ends January 31, 2027. A trailing Walmart EPS figure should not be labeled as Costco fiscal 2026 EPS or treated as a same-period comparison.
Can I receive Costco’s $30 payment if I buy shares after November 24, 2026?
The company specified a record date at the close of business November 24, 2026, with payment on December 4. Purchases after the relevant ex-dividend timing generally do not qualify, so investors should verify settlement and ex-date rules with their broker rather than rely only on the payment date.
