The DivGro Weekly—16.02.24

154 Consecutive dividend increases

Weekly Dividend Progress

This week we received further real-time, tangible evidence of outstanding business progress when L'Oréal, Evolution and Hermès proposed significant dividend increases of 10.0%, 32.5% and 15.4% respectively, for approval in their upcoming annual meetings. Hermès also proposed a substantial special dividend. Meanwhile, Watsco declared a dividend increase of 10.2%. We also received our dividends from Mastercard, Texas Instruments and Abbott, all higher than this time last year.

How We Are Tracking

Since DivGro's inception we have predicted and benefited from 154 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.9%.

L’Oréal

115 years ago, L'Oréal debuted with its patented blonde hair dye – an instant viral success that catapulted the company to the industry frontline. Today, it is the global beauty market leader, with 2023 sales exceeding 40bn euros. In a trend-driven industry, its tagline – 'Because You're Worth It' – has achieved unparalleled ubiquity and established a fidelity to the brand that is unmatched; its dominance converts into enviable gross margins nearing 75 per cent. This in turn enables L'Oréal to reinvest heavily into advertising and R&D, widening the gap between itself and competitors, and reinforcing the connective thread that anchors consumers to the company. While beauty products are not technically a royalty, consumers rely on them ad infinitum such that they are effectively indispensable – and in L'Oréal's case, an incredibly valuable and durable 'near-royalty'. Entrenched leadership, coupled with immense profitability and an endless pool of current and potential consumers, fortify L'Oréal's rock-solid position, exposing the company to opportunities to extend its dividend growth record in the future.