The DivGro Weekly—20.01.23

118 Consecutive dividend increases

This week we received further real-time, tangible evidence of outstanding business progress when we received our quarterly dividend from Intuit, and became entitled to our quarterly dividends from Abbott Laboratories and Watsco, all having increased since the year before.

We are pleased to report that this week DivGro paid its 13th consecutive quarterly distribution. This distribution is 11.5% higher than the same time last year.

Since DivGro's inception we have predicted and benefited from 118 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.2%.

Watsco, our dominant leader in the highly fragmented HVAC distribution space raised its dividend in October by 11.4%, on top of already raising its dividend earlier in the same year by 12.8%. As governments move towards regulating the efficiency and emissions of heating and cooling systems more strictly, new systems become more sophisticated and more expensive. When replacing current systems households therefore have no choice but to upgrade at correspondingly higher prices. As a distributor, these price escalations benefit Watsco directly because its sales increase without any attendant uplift in selling costs or efforts. Additionally, as the installed base gradually becomes more sophisticated, the price of repair and maintenance equipment rises in tandem, and because Watsco dominates the aftermarket channel as well, this essentially underwrites an uplift of its future sales. With these dynamics in its favour, Watsco is very well positioned to extend its outstanding dividend growth record well into the future.