The DivGro Weekly—27.12.24

177 Consecutive dividend increases

Weekly Dividend Progress

This week we received further real-time, tangible evidence of outstanding business progress when Heico declared its latest dividend, 10% higher than this time last year.

How We Are Tracking

Since DivGro's inception we have predicted and benefited from 177 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.56%.

Heico

In 1990, the Mendelson family took control of Heico, heralding spectacular shareholder rewards as the company continued to raise its dividend and multiply its share value more than 800x. What makes results like these possible? Heico manufactures approximately 20,000 highly engineered, government-regulated aftermarket parts for the aviation and aerospace industries. Herein lies its secret sauce: while its aftermarket parts match or exceed the performance of those produced by OEMs, unlike OEM competitors who must price their parts expensively in order to recover vast upfront R&D costs, Heico can price its parts at steep discounts of up to 30-50 per cent. On the surface, naysayers may look at the two per cent market share of Heico’s largest business segment and assume a comparative disadvantage — but they would be wise to invert. With Berkshire Hathaway’s recent stamp of approval, it may be argued that the view taken by Heico management is not only future-focused, but shared: since its OEM competitors consistently expand the market, at least insofar as their annual price increases of 6-13 per cent, this dynamic allows Heico scope to sustain its remarkable growth rate — perhaps forever — providing a lucrative runway for a long extension of its stellar dividend growth.