Is COST (Costco Wholesale Corporation) Halal or Haram?

Based on our AAOIFI-standard shariah screening, COST is Halal and considered permissible for Muslim investors. It passed all 4 of 4 compliance screens including business activity review, debt-to-market-cap ratio (1.87% vs ≤33% threshold), interest income ratio (0.18% vs ≤5% threshold), and cash & securities ratio (3.49% vs ≤33% threshold).

Costco Wholesale Corporation is a global retail giant operating membership- only warehouses that offer a vast array of products, from bulk groceries and fresh produce to electronics and home appliances. Known for its 'Kirk land Signature' private label, the company focuses on high sales volume and rapid inventory turnover, serving millions of members across the US, UK, Canada, and international markets. Its business model relies heavily on membership fees, which provide a stable stream of income separate from direct merchandise sales. For Muslim investors, Costco is currently classified as Halal, having passed all four AAOIFI shariah screening criteria. The company's primary business of discount retailing is permissible, and while it does sell some haram products like alcohol and pork, these are incidental to its massive general inventory. This passing status means you can confidently include COST in a shariah-compliant portfolio without needing to purify significant portions of dividends, though minor purification for the small percentage of impermissible revenue is always recommended. Financially, Costco is a standout for Islamic investors due to its remarkably clean balance sheet. With interest-bearing debt sitting at only 1.9% of its market cap —far below the 33% threshold—and cash holdings at just 3.5%, the company avoids the heavy leverage that often disqualifies other major retailers. This financial discipline suggests a management style that aligns well with Islamic principles of avoiding excessive debt and usury. Investors should continue to monitor the percentage of revenue derived from non-compliant goods like alcohol and tobacco to ensure it remains below the 5% tolerance threshold. While currently safe, Costco's expansion into new markets could shift its product mix, so keeping an eye on annual reports for specific category breakdowns remains a prudent practice for the conscientious Muslim investor. Costco Wholesale Corporation operates in the Consumer Defensive sector under the Discount Stores industry and is headquartered in Issaquah, WA, US. The company is led by CEO Ron Vachris and employs approximately 333,000 people.

COST was screened using AAOIFI-based shariah compliance criteria. Four tests are applied: (1) Business Activity — the company's core business must not derive primary income from haram (prohibited) activities such as alcohol, gambling, tobacco, or interest-based finance. (2) Debt-to-Market-Cap — total debt must not exceed 33% of market capitalization. (3) Interest Income — interest income must not exceed 5% of total revenue. (4) Cash & Securities — cash and interest-bearing securities must not exceed 33% of market cap. COST passed 4 of these 4 screens.

Although COST passes all shariah screens, it does earn $505.0M in interest income (0.18% of revenue). Many scholars recommend purifying this portion by donating the equivalent percentage of any dividends received to charity. For example, if you receive $100 in dividends, you would donate approximately $0.18 to purify the income.

COST was last screened on 2026-02-24. Shariah compliance status can change as companies report new financial data, acquire new businesses, or shift revenue streams. We recommend checking back periodically for the most up-to-date screening results.