We report on the early stage of Cobalt growth on Pd(111) studied with scanning tunneling microscopy. The electronic structure of the islands grown at 550 and 300 K was studied with scanning tunneling spectroscopy at low temperatures. Triangular monolayer-high islands grown at 550 K show fcc or hcp stacking. The position and the intensity of the surface-state peak depend on the stacking of these islands. On the hexagonal double-layer islands grown at 300 K, a dislocation pattern appears, which contains atoms in fcc and hcp, as well as a dislocation line and top positions. Fcc and hcp regions show similar features in dI/dU spectra; however, the surface-state peak positions are slightly shifted. For these islands, spin-polarized STS measurements reveal a spin contrast reflecting perpendicular magnetization. ©2008 The American Physical Society