3 Stocks With Special Dividends: Big Payouts for Savvy Investors

Key Points

• Special dividends, also called supplemental dividends, are irregular and often large dividend payments.
• These add to a stock's regular dividends, increasing its dividend yield.
• These three stocks have shown their willingness to reward special dividends in the past.

Special dividends are an added potential benefit for shareholders in certain companies. These payments are separate from a stock’s regular dividend, which is usually paid on a quarterly basis. Special dividends happen irregularly and tend to be much larger than regular dividends. Due to this, they can provide a large temporary boost to the dividend yield investors earn from a stock. These payments often occur when a company’s performance is particularly strong.

By their nature, no one exactly knows when a company will decide to reward its investors with a special dividend. However, there are stocks that have shown patterns of paying special dividends. This provides data to understand which companies may be more likely to pay special dividends in the future. Below are three well-known stocks that have histories of paying special dividends. 

Costco: Big Boxes, Big Special Dividends

Costco NASDAQ: COST, the membership-based consumer staples stock not only pays a regular dividend, but also special dividends. Currently, the company’s regular dividend payment is $1.16 per share. With the company’s share price over $900, the stock has a dividend yield of only around 0.5% annually. However, the company’s massive special dividends have sometimes bumped this number up considerably. The company paid a special dividend in 2015, 2017, 2020, and at the beginning of 2024. Each time, the payment grew significantly. It started at $5 in 2015, went up to $7, then $10, and most recently, a whopping $15.

When accounting for the firm’s 2024 special dividend, its dividend yield jumps up to 2.1%. The yield reached nearly 6% in 2017, and edged over 4% in early 2021 due to the 2020 special dividend. Still, the company’s dividend yield has been dropping consistently over time. However, that is largely due to the fact that the shares are up nearly 500% since the beginning of 2017. The company’s regular and special dividend payments have both risen substantially as well, but just not enough to keep up with the stock that has risen nearly three times more than the S&P 500 since 2017. This is what caused the yield to fall.

ConocoPhillips: A Different Approach to Special Dividends 

ConocoPhillips NYSE: COP is another big-name U.S. firm that has shown a willingness to pay shareholders back with special dividends. It has performed this three times in 2024, using a variable return of cash (VROC). This is a type of special dividend that usually is smaller but more frequent. They can occur when a company meets short-term performance goals. It made these VROC payments along with its dividend payments nearly every quarter from 2022 to 2024.

As of the company’s latest earnings report, it has decided to fully incorporate the VROC into its regular dividend. In Q2, the regular dividend was $0.50 per share, while the VROC was $0.28. In Q3, the regular dividend was simply the combination of the two at $0.78. This means the company expects to have more consistency in its ability to provide a higher regular dividend.

Although the VROC is not part of the company’s future, its use does signal that the firm may be willing to provide a larger, less frequent special dividend going forward. The company’s outsized $1.40 VROC in Aug. 2022, which was over three times larger than the regular dividend that quarter, provides some evidence of this. The company also said it is looking to grow its dividend at a faster rate than 75% of S&P 500 companies.

Ford: Adding to Its Big Yield With Extra Payments

Ford NYSE: F has returned to paying investors a strong dividend. Based on the company’s $0.15 regular dividend paid last quarter, its dividend yield is 5.3%. When incorporating the $0.18 special dividend paid in March, the figure jumps to nearly 7%. Ford also made a much larger $0.65 special dividend payment in March 2023. It also paid a special dividend each year from 2016 to 2018.

Ford’s dividend yield sits way above the 1.2% figure provided by the SPDR S&P 500 ETF Trust NYSEARCA: SPY over the last twelve months. It is also way above that of all other U.S. automakers. Unfortunately, Ford has still provided a total return of -30% over the past three years, which is a dreadful showing. It is interesting to note that European car companies take the cake when it comes to dividend yield; some have the figure in double digits.