Key Points
Costco should stretch its run of annual dividend hikes to 23 in April.
Cintas has delivered 43 years of payout hikes.
Costco and Cintas have payout ratios of 35% and 33%, respectively, giving them wiggle room to keep boosting their distributions.
- 10 stocks we like better than Costco Wholesale ›
Dividends have rarely been as cool as they are right now. It's one of the few investing strategies generating positive returns this year, as a flight to quality finds even growth investors warming up to the timeless appeal of steady distributions.
I want to zoom in on two stocks in particular. Costco (NASDAQ: COST) and Cintas (NASDAQ: CTAS) are strong businesses that you probably already know. They also happen to have long histories of strong dividend hikes. Their payouts are manageable. These are quality dividend stocks, making them no-brainer investments in 2026.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
They are very different companies. Costco is the top dog in warehouse clubs, famous for more than just its $1.50 hot dog and soda combos. Cintas is the country's leading provider of corporate identity uniform rentals, first aid kits, and other workplace essentials.
The two stocks have a lot in common. They both posted year-over-year revenue growth of 9% in their latest quarters, announced earlier this month. Their dividend yields are modest, and their P/E ratios are high, but the distributions are secure. Both companies are returning roughly a third of their trailing earnings to shareholders in the form of payouts. Costco and Cintas also have boosted their dividends annually for more than two decades, and those hikes have been substantial. Let's take a closer look at both companies.
1. Costco
Costco stock is a great place to start. It's probably one of the most recession-resistant retailers out there. Sure, Costco will sell flashy TVs and book travel plans for its members, but at its core it's a place that offers its growing fan base great prices on groceries and household essentials.
The markups are modest. The money it collects in annual membership fees accounts for the lion's share of its net income. Don't let the 3% net margin dissuade you. Costco makes it up in volume, and it's also why membership renewals are high and comps are robust.
Costco should be near the top of safe stocks in the retail space, even with a forward earnings multiple of 48. You pay a premium for a premium company. Costco has delivered positive top-line growth in 32 of its last 33 years.
Let's close by talking about the dividend. The stock's 0.5% yield is admittedly unimpressive, but next month it should stretch its streak of payout hikes to 23 years. Costco has also issued much larger special dividends as one-time distributions four times over the past 11 years.
2. Cintas
If Costco being set to jack up its dividend rate for 23 consecutive years is impressive, Cintas is working on a 43-year run. Cintas came through with a strong financial update this week. It was another "beat and raise" performance for the industry leader.
It's trading at a rich 36 times forward earnings, but -- like Costco -- Cintas has earned the market premium. Is a business that outfits businesses, in more ways than one, vulnerable to economic downturns and a shift to remote workforces? Sure. But Cintas finds a way to keep growing by picking up smaller rivals through accretive deals in this fragmented industry. The stock's 1% yield may not seem like much, but you know the payouts will keep rising with every passing year.
Should you buy stock in Costco Wholesale right now?
Before you buy stock in Costco Wholesale, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $497,659!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,095,404!*
Now, it’s worth noting Stock Advisor’s total average return is 912% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of March 26, 2026.
Rick Munarriz has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool recommends Cintas. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
