The DivGro Weekly—23.02.24
156 Consecutive dividend increases
Weekly Dividend Progress
This week we received further real-time, tangible evidence of outstanding business progress when Home Depot and Moody’s increased their quarterly dividends by 7.7% and 10.4% respectively. We received our quarterly dividend from Costco and our interim dividend from Hermès and became entitled to our quarterly dividends from MSCI, Microsoft and Cintas, all much higher than this time last year. We also featured on ausbiz this week, where we discussed another DivGro holding, FirstService. The interview can be accessed here.
How We Are Tracking
Since DivGro's inception we have predicted and benefited from 156 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.8%.
Hermès
Hermès, our gilt-edged fort of luxury leather goods, has presided over fashion’s uppermost echelons for 187 years. In an industry that churns goods and worships newness, that is a near-impossible feat. So, how does Hermès continue to gather momentum, and bat competitors off its throne (plus, propose a 15.4% dividend increase and a hefty special dividend)? Originally from Paris, the company has for nearly two centuries, established a special and unassailable interplay wherein 1) it services only the ultra-wealthy and in so doing 2) secures an aspirant cohort-in-waiting who will pay premium prices for its product. Several, wonderful knock-on economic effects ensue. For one, its demographic is insulated from typical stress tests, including Covid and price hikes and, counterintuitively yet happily, these customers relish price escalations. Unlike other assets, like cars, that usually depreciate once they hit the road, a Birkin or Kelly bag appreciates in value; price rises protect Hermès’s most loyal habitués and widen the gap between owners and hopeful-owners, reinforcing the brand’s — and customer’s — prestige. Plus, an ongoing stream of limited colourways and rare leathers generates repurchases, keeping Hermès en vogue and retaining its customers in a virtuous cycle that foreshadows a long and prosperous dividend trajectory.
