Jim Trippon CPA

Costco (Nasdaq: COST), the largest operator of warehouse stores in the U.S., has become known for helping shoppers save money by purchasing items in bulk, but the company also has something in store for income investors: A fresh quarterly dividend increase to the tune of 14%.

Costco's new quarterly payout will be 20.5 cents a share up from 18 cents. The new dividend is payable on May 21st to shareholders of record on may 7th.

The new dividend would increase the yield on Costco's shares to 1.3% from 1.2% based on Friday's closing price.

While Washington-based Costco hasn't been paying a dividend very long (its first cash dividend was paid in 2004), the company appears to take rewarding its shareholders seriously as the payout has been increased every year for the last six.

Costco's dividend growth rate is now more than 100% in those six years.

The dividend may help keep investors interested in Costco shares because the stock has substantially lagged the Nasdaq on a year-to-date basis. Costco shares are up 2% while its home index is up nearly 12%.

With a payout ratio of just 28% and $9.38 a share in cash, the new dividend isn't likely to strain Costco's balance sheet.