The DivGro Weekly—25.08.23

143 Consecutive dividend increases

This week we received further real-time, tangible evidence of outstanding business progress when we collected our quarterly dividend from Poolcorp and became entitled to our quarterly dividends from Moody's, SBA Communications and Costco, all significantly higher than this time last year.

Since DivGro's inception we have predicted and benefited from 135 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.4%.

Costco developed an unfair structural advantage over competitors by ferociously protecting its members' interests, recognizing that customer trust is its most prized asset. Unlike most businesses which aim to maximize the profitability of their ordinary operations, Costco - through extremely sharp pricing and its enduring quest for operational efficiencies - rather seeks to minimize this form of profitability. Instead, Costco charges its 120 million members about $70/year for the privilege of accessing its low prices, subscription revenue which is almost all pure profit. At a recent presentation Costco was challenged why it chose not to raise membership fees in an inflationary environment where everyone else is raising prices, even though it could easily have done so. It argued that especially now, when members may be grappling with cost-of-living increases, it was essential to protect them. It is this unrivalled customer alignment that distinguishes Costco and fortifies customer loyalty, which has in turn powered its enviable dividend growth record of 13% per annum compounded since 2004 (plus significant periodic special dividends).