COST vs MKC: Dividend Comparison
Dividend data as of
Costco Wholesale Corp /New (COST) and Mccormick & Co Inc (MKC) are both in the Consumer Staples sector, making them natural rivals for dividend investors. MKC offers a significantly higher 2.61% yield compared to COST's 0.52%, a gap of 2.09%. For dividend growth, COST leads with a 5-year CAGR of 20.9% versus MKC's 7.1%. COST holds the edge in dividend safety with a "Safe" rating. MKC is a Dividend Aristocrat with 27 years of consecutive increases.
Verdict
Yield Analysis
MKC yields 2.09% more than COST. In dollar terms, COST pays $5.06/share vs MKC's $1.80/share annually.
Dividend Growth
COST: Dividend growth is slowing — the 3-year CAGR of -47.1% trails the 5-year rate of 20.9% and the 10-year rate of 15.8%.
MKC: Dividend growth has been steady, with a 3-year CAGR of 7.3% and a 5-year CAGR of 7.1% (10-year: 8.5%).
Dividend Safety
COST: The payout ratio of 27% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.7x.
MKC: The payout ratio of 61% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.6x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in COST vs MKC today?
At $1015.00 per share, $10,000 buys about 9.9 shares of Costco Wholesale Corp /New (COST). Each share pays $5.06 per year in dividends, so the position starts out generating roughly $50 per year — about $4 a month.
At $71.91 per share, $10,000 buys about 139.1 shares of Mccormick & Co Inc (MKC). Each share pays $1.80 per year in dividends, so the position starts out generating roughly $250 per year — about $21 a month.
MKC is the larger income stream from day one: $200 per year more on the same $10,000 invested.
What could $10,000 of COST or MKC income look like in 10 years?
Costco Wholesale Corp /New (COST) has raised its dividend about 20.9% a year over the past five years. If that pace held, the $52 per year that $10,000 generates today at the current 0.52% yield would reach $347 per year by 2036 — a 3.5% yield on the original cost.
Mccormick & Co Inc (MKC) has raised its dividend about 7.1% a year over the past five years. If that pace held, the $261 per year that $10,000 generates today at the current 2.61% yield would reach $519 per year by 2036 — a 5.2% yield on the original cost.
On those trailing rates, MKC pays more in 2036: $519 versus $347 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would COST's dividend growth overtake MKC's higher yield?
Costco Wholesale Corp /New (COST) yields less today (0.52% vs 2.61%) but has grown its dividend faster — 20.9% vs 7.1% a year over the past five years. If both trends continued, a $10,000 position in COST would start out-earning the same position in MKC around 2040 (roughly 14 years from now), paying about $741 per year at the crossover. Before that point, MKC pays more each year; after it, the gap compounds in COST's favor.
Can COST and MKC afford their dividends?
Costco Wholesale Corp /New (COST) earns $18.65 per share against $5.06 paid out in dividends — 3.7x coverage (a 27% payout ratio).
Mccormick & Co Inc (MKC) earns $2.93 per share against $1.80 paid out in dividends — 1.6x coverage (a 61% payout ratio).
COST's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for MKC if earnings weaken.
Which fits an early-retirement income portfolio better, COST or MKC?
For income you need right now, Mccormick & Co Inc (MKC) leads: $100,000 invested today pays about $218 a month at the current 2.61% yield, versus $43 a month from Costco Wholesale Corp /New (COST) at 0.52%.
With a decade or more before the income is needed, COST's faster dividend growth (20.9% vs 7.1% a year) matters more than the starting yield — raises compound into the larger paycheck over time.
On consistency: MKC has raised its dividend 27 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $366/yr in COST vs $672/yr in MKC by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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