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How to buy Costco stock in Canada
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How to buy Costco stock in Canada - An easy guide

Money.ca / Money.ca

Noel Moffatt

By Noel Moffatt

🗓️

Updated: December 04, 2024

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Curious about how to buy Costco stock in Canada? 

This guide covers it all — from opening a brokerage account to funding it and making your first purchase. Follow these straightforward steps to start your investment journey.

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Key takeaways

  • To buy Costco stock in Canada, investors must first open a brokerage account, focusing on features like commission-free trading, fractional shares and low fees
  • Researching Costco’s financial metrics, business model and market performance is essential to ensure the stock fits within investment goals and risk tolerance before making a purchase
  • Investors should monitor their Costco stock after purchase, regularly assessing performance and making necessary adjustments to their investment strategy based on market conditions

Step-by-step guide to buying Costco stock

Ready to invest in Costco and tap into one of the most reliable retail giants?

Whether it’s their unbeatable business model or their steady track record, I’ve got you covered with this easy-to-follow guide to get started.

1. Open a brokerage account

The first step is setting up a brokerage account that lets you buy US-listed stocks, such as Costco. If you’re a Canadian investor, you’ll want a platform that doesn’t overcomplicate things — look for beginner-friendly options with low fees and solid currency conversion tools.

Setting up your account is pretty straightforward — complete the application process, verify your identity and link your bank account.

Brokerage accounts Fast facts Get started
cibc investor's edge logo Best for: beginners

Features: Easy-to-use platform, low fees, student and young investor discounts 		Visit CIBC Investor's Edge
Interactive brokers logo Best for: lowest commissions

Features: Low margin rates, access to global markets, powerful research tools 		Visit Interactive Brokers
Moomoo Canada logo Best for: low fees

Features: CDN and US trading, low transaction fees, 6% cash rebate plus $2,200 in perks 		Visit Moomoo Financial

2. Fund your account

After your account is up and running, it’s time to deposit some funds and get ready for your first stock purchase. Here’s how you can do it:

  • Bank transfers: The go-to option—secure, simple and usually fee-free
  • Credit or debit cards: Quick and convenient, but keep an eye out for those sneaky fees
  • Wire transfers: Great for moving larger amounts, but they can come with higher costs 

For US stock purchases, watch out for currency conversion fees. Services such as Norbert’s Gambit can help you exchange Canadian dollars for US dollars more affordably, maximizing your investment power.

3. Place an order for COST stock

Now comes the exciting part — buying Costco stock!

  • Search for the stock: Enter Costco’s ticker symbol, COST, in your broker’s search bar to pull up the stock details and current market price
  • Choose your order type, you have two options
  • 1. Market order: Executes immediately at the current price. Great for quick transactions
  • 2. Limit order: Lets you set the maximum price you’re willing to pay, giving you more control over the purchase
  • Decide your investment amount: If your broker allows fractional shares (just introduced by TD Direct invest) you can purchase a portion of a Costco share, making it more accessible for smaller budgets

Review your order and click “Buy” to complete your purchase. Congratulations — you’re officially a Costco shareholder!

4. Monitor your investment

Investing doesn’t stop at hitting the “Buy” button — there’s still some work to do. Staying on top of your investment helps you make smarter decisions over time. Here’s how to keep the momentum going:

  • Leverage brokerage tools: Use your broker’s watchlists and alerts to stay updated on price movements and any Costco news that might impact your investment. It’s like having a personal assistant for your portfolio.
  • Stay informed: Keep an eye on Costco’s quarterly earnings reports, industry news and broader market trends. Knowing what’s happening in the world (and at Costco HQ) will help you understand how your investment is performing.
  • Adjust your strategy: Periodically review your portfolio to make sure it still lines up with your financial goals. If Costco is crushing it — or if the market takes a turn — you may need to tweak your holdings to keep things on track.

Follow these steps, and you’re not just buying Costco stock — you’re building a solid foundation for a strong portfolio. Now kick back, relax and let Costco’s powerhouse business model do its thing.

Considerations before investing in Costco stock

  • 1. Costco’s business model and growth

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    Costco’s secret sauce lies in its membership-only business model. Those annual membership fees aren’t just a nice bonus — they’re a rock-solid revenue stream that keeps the company running smoothly. With renewal rates consistently above 90%1, Costco has locked in a loyal customer base that’s not just sticking around, but coming back for more. This loyalty lets Costco keep prices low, which is a huge part of their value proposition. Who doesn’t love a great deal?

    Now for the fun part — the numbers. Costco’s recent performance has been nothing short of impressive, raking in a jaw-dropping $254.45 billion2 in revenue over the past 12 months. Their global footprint spans the US, Canada, Mexico and Asia, all contributing to that massive success.

    And let’s not overlook those membership revenues — they’re a financial powerhouse on their own, bolstered by smart expansion moves and strong same-store sales growth.

    Bottom line? Costco’s business model isn’t just working — it’s thriving, and it’s a big reason why they’re a leader in the retail game.

  • 2. Financial health and profitability

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    Costco’s financial health tells a story of strong operational efficiency and consistent profitability. With operating cash flow at $11.34 billion and debt sitting at $8.27 billion, the company clearly has no problem generating cash to fund growth initiatives and stay ahead of the curve.

    Now, let’s talk about valuation. Costco’s price-to-earnings (P/E) ratio of 58.213 might look steep compared to industry averages, but it reflects a lot of confidence from investors in the company’s future growth.

    They’ve also been steadily increasing dividends, showing their commitment to rewarding shareholders, even if the current yield is a bit lower than the S&P 500 average. This steady growth in dividends is a reassuring signal for those in it for the long haul.

  • 3. Competitive positioning

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    Costco has carved out a unique spot for itself in the retail world, standing shoulder to shoulder with giants such as Walmart and Target.

    What sets them apart?

    Their focus on bulk offerings and low prices, backed by an efficient supply chain and their no-frills warehouse model, which helps keep costs down and savings flowing straight to their members.

    That said, they’re not without challenges. E-commerce heavyweights such as Amazon and changing consumer preferences toward convenience and home delivery, have added pressure. But Costco’s membership model and unmatched brand loyalty give them a serious edge.

    Even with these hurdles, the company is well-positioned to lead in the wholesale retail space and seize opportunities for continued growth.

Alternative ways to invest in Costco stock

ETFs that include Costco

Investing directly in Costco stock may not fit everyone’s portfolio strategy or risk profile.

Fortunately, there are diverse ways to weave Costco into your investment narrative while broadening your financial canvas. Here’s how you can dip into the Costco success story through exchange-traded funds (ETFs) that feature the company amidst a broader retail or consumer staples ensemble, as well as other top-tier retail giants.

Tapping into ETFs can be a savvy move to secure a stake in Costco while cushioning the volatility of single-stock investments. 

A couple of ETFs provide an excellent gateway to Costco alongside other stalwarts in the retail and consumer staples arenas:

  • Vanguard Consumer Staples ETF (VDC): Zero in on the consumer staples sector with this ETF where Costco stands as a prime component. It's tailor-made for investors hunting for robust, recession-proof stocks.
  • SPDR S&P 500 ETF Trust (SPY): Among the most actively traded ETFs, SPY spans the S&P 500 index, encompassing Costco. This fund is perfect for those desiring expansive market exposure with a side of Costco. Investing in these ETFs lets you ride along with Costco’s performance while distributing your risks across a broad spectrum of companies.
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Consider diversifying with other retail stocks

Broadening your retail horizons can be strategic. Consider these major players in the retail sector to further diversify your portfolio:

  • Walmart (WMT): With a vast global presence and a knack for competitive pricing, Walmart stands as a retail titan.
  • Amazon (AMZN): A behemoth in e-commerce and a trailblazer in retail innovation, Amazon promises substantial growth prospects.
  • Target (TGT): Anchored by a devoted customer base, Target offers a blend of stability and potential for growth. Mixing these stocks into your investment mix can offer a buffer against sector-specific fluctuations while allowing you to capitalize on the retail industry's overarching growth.
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Broader consumer staples or retail sector ETFs

For those leaning towards even broader diversification, sector-focused ETFs could be the answer. These funds trim down volatility and broaden exposure to Costco and its contemporaries. 

Consider these ETFs for a more balanced investment approach:

  • iShares Global Consumer Staples ETF (KXI): This ETF provides a global taste of the consumer staples market, including Costco.
  • VanEck Retail ETF (RTH): With a focus squarely on the retail sector, this ETF corrals Costco alongside other notable names like Amazon and Walmart. These ETFs are crafted for investors who prefer a more even-keeled investment journey, balancing the individual stock performances with broader sector dynamics.

By opting for ETFs or diversifying with a mix of retail giants, you can smartly integrate Costco into your investment strategy, mitigating risks and steering towards your long-term financial aspirations.

Track all markets on TradingView

Properly managing your investment in Costco stock requires ongoing tracking of its performance, keeping up with industry trends, and understanding the tax implications and exit strategies specific to US stock investments in Canada.

Tracking and analysis tools

Let’s be honest, staying on top of Costco’s stock (or any stock for that matter) isn’t just a one-and-done job. It’s like watering a plant — you’ve got to check in regularly to make sure it’s still thriving. 

Here are some handy tools to help you keep Costco — and your portfolio — in check.

  • Wealthica: A Canadian-focused portfolio tracker that consolidates your investments across various brokerages and provides insights into performance, allocation and dividends
  • Morningstar: Offers in-depth stock analysis, ratings and industry reports, which are valuable for tracking Costco’s financial performance and comparing it with competitors
  • Yahoo Finance: An accessible platform for setting stock alerts, viewing historical data and staying updated on Costco-specific news
  • Brokerage Tools: Most brokerage platforms offer customizable watchlists, real-time market data, and performance analytics. Take advantage of these features to track Costco’s stock price and dividends.
  • Seeking Alpha: A research platform offering analysis and news related to Costco and the broader retail sector, helping you stay ahead of industry trends
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Selling Costco stock at the right time is just as critical as buying it — timing can make all the difference. However, if you’re a Canadian investor holding US stocks, such as Costco, it’s equally important to understand the tax implications. 

Understanding cross-border tax rules can help you retain more of your gains and maximize investment returns. It’s not just about pocketing gains, it’s about keeping as much of those gains as possible. 

Let’s dive into why understanding the tax side of things can seriously boost your bottom line.

Tax considerations:

  • Capital gains tax: When you sell US stocks like Costco, any profits are subject to capital gains tax in Canada. However, only 50% of your capital gains are taxable, and the rate depends on your total income.
  • Dividend tax withholding: Costco dividends are subject to a 15% withholding tax by the US government for Canadian investors. This tax can often be claimed as a foreign tax credit on your Canadian tax return, reducing double taxation.
  • Registered accounts: Investing in Costco through a registered account like an RRSP allows you to avoid US withholding taxes on dividends, making it a tax-efficient option for holding US stocks.

Exit strategy:

  • Set target prices: Determine a target price to sell your Costco stock based on valuation metrics or market conditions. This ensures you lock in profits or minimize losses.
  • Use stop-loss orders: To manage risk, consider setting a stop-loss order that automatically sells the stock if it falls below a specific price.
  • Reassess investment goals: Periodically review whether Costco stock aligns with your financial goals. If market conditions or personal priorities shift, it may be time to adjust or exit your position.
  • Diversify proceeds: After selling, reinvest the proceeds in other assets to maintain diversification and avoid overexposure to a single sector.

By leveraging robust tracking tools and understanding the tax and strategic aspects of selling Costco stock, you can effectively manage your investment for long-term success.

FAQs about investing in Costco stock

  • Does Costco pay dividends?

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    Yes, Costco pays regular quarterly dividends, demonstrating its commitment to returning value to shareholders. In addition to its regular payouts, the company has a history of issuing special dividends, further enhancing investor returns. Although its dividend yield is lower than the market average, Costco’s consistent growth, financial stability and history of special dividends make it appealing for income-focused investors.

  • Can I buy Costco stock in Canadian dollars?

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    No, Costco stock trades in US dollars on US exchanges. Canadian investors must convert their funds to USD to purchase it unless they use a dual-currency registered account. To minimize conversion fees, consider using currency conversion strategies such as Norbert’s Gambit, which allows you to exchange CDN for USD more affordably through specific brokerage platforms.

  • Is Costco stock a good long-term investment?

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    Costco’s strong business model, reliable membership revenue and consistent financial growth make it a compelling long-term investment. The company’s global expansion, high customer loyalty and steady dividend growth further solidify its position as a stable choice for investors seeking growth and income over time.

  • sources

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    1. https://www.retailtouchpoints.com/topics/customer-experience/costco-delays-membership-fee-hike-as-member-growth-continues

    2. https://companiesmarketcap.com/costco/revenue/

    3. https://www.financecharts.com/stocks/COST/value/pe-ratio

Noel Moffatt Writer

Noel Moffatt is a Canadian fintech expert with a passion for simplifying personal finance. Based in St. John’s, NL, he draws on his background in finance, SEO, and writing to deliver clear explanations and actionable advice. Noel is dedicated to equipping readers with the knowledge and tools they need to make informed financial decisions, striving to make personal finance more accessible and understandable through his in-depth articles and reviews.

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