When investors think about dividend stocks, they usually start with high-yielding names. Utilities, telecoms, and big consumer staples often dominate the conversation. But sometimes the best dividend opportunities come from companies with low payouts.

That's where membership-based wholesale retailer Costco (COST -0.35%) and Google parent Alphabet (GOOG 0.52%) (GOOGL 0.46%) come in. Both yield less than 1%, making them easy to dismiss for income. Yet, both are outstanding businesses with excellent dividend growth prospects. Costco, specifically, delivers incredible stability and even pays occasional special dividends on top of its regular dividend. Meanwhile, Alphabet has a brand-new payout and is one of the cheapest valuations among big tech.

But which one of these two dividend growth stocks edges out the other when compared head-to-head?

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Costco: Dependable income at a high price

Costco has a reputation for consistency, and its dividend reflects that. The company's payout is below 30%, leaving plenty of room for business reinvestment and steady dividend increases over time. Additionally, Costco has increased its dividend every year for more than two decades, with an annual growth rate of around 13% in recent years. The latest raise came this spring, when management boosted the quarterly dividend to $1.30. That puts the annual payout at $5.20 and the dividend yield at roughly 0.5%.

Notably, Costco offers more than just its regular dividend. From time to time, the company pays special dividends, too. In early 2024, for instance, shareholders received a $15 special dividend. These extra payouts can make a big difference for long-term holders, even though they come only occasionally.

The issue with Costco, however, is the stock's valuation. Shares trade at more than 50 times earnings, a very high multiple for a stock that grew its sales and earnings per share 8% and 13%, respectively, in its most recent quarter. That premium reflects both the quality of the business and investors' willingness to pay up for its reliability.

But such a lofty valuation leaves little margin for error. Even though sales and earnings continue to grow at a healthy pace, today's stock price already bakes in years of strong performance. Investors buying now should expect modest returns from here unless Costco delivers upside surprises.

Alphabet: Small yield, big upside

Alphabet only started paying a dividend in 2024, so it doesn't have Costco's long track record. The payout is small, with an annual dividend of $0.84 per share and a yield of around 0.4%. But the payout ratio is less than 10%. That leaves huge room for growth if management decides to raise the dividend in future years.

The company is also aggressively investing in its business (perhaps explaining why management increased its dividend by only 5% this year). Capital expenditures are surging as Alphabet builds out its artificial intelligence (AI) and cloud infrastructure. Sure, this has weighed on free cash flow in the short term. But investors should remember that these investments are aimed at capturing long-term growth opportunities.

Making the case for Alphabet stock even stronger, the internet search and cloud computing company's growth story benefits from a diversified set of key revenue sources -- and they're all doing well. Alphabet's advertising business remains strong, YouTube continues to expand, and Google Cloud is gaining ground.

Unlike Costco, valuation is a bright spot for Alphabet. Shares trade at about 21 times forward earnings -- a much lower multiple than tech peers like Microsoft and Meta and far below Costco.

That's unusual for a company still posting strong double-digit growth in both revenue and profits. Revenue and operating income both increased 14% year over year in the company's second quarter of 2025. With earnings growth like this, Alphabet could ramp up its dividend in a big way down the road (though it might have to get through a period of high capital expenditures first as it invests aggressively in growth).

A clear winner

Costco and Alphabet may both look like low-yield stocks, but they represent two very different kinds of dividend investments. Costco is the steady option. It offers a safe payout, regular increases, and the occasional special dividend. But investors pay a steep price for that safety, which limits future returns.

Alphabet, by contrast, has only just begun rewarding shareholders with dividends. The yield is tiny but could grow substantially over time. More importantly, the tech stock's valuation is much cheaper than Costco's. For investors willing to accept a small payout today in exchange for better long-term potential, Alphabet is the clear winner.