The DivGro Weekly—26.01.24
149 Consecutive dividend increases
This week we received further real-time, tangible evidence of outstanding business progress when S&P Global increased its dividend by 1.1%, extending our record of consecutive dividend increases since DivGro's inception to 149 at an average rate of 14.9% per company dividend, per year. During the week we also collected our quarterly dividends from Roper and Heico, and became entitled to our quarterly dividend from Lowe's.
Last week the DivGro Fund paid investors the 17th consecutive quarterly distribution, 12.1% higher than this time last year, having increased by at least a double-digit percentage every year.
S&P Global, our gilt-edged leader in data services for financial industries alongside Moody’s (another key DivGro holding), recently announced a dividend raise. Though nominal, this raise illustrates the big-picture thinking that has enabled the company to thrive since 1860. Occasionally, opportunities that must be seized now to maximise growth later, avail themselves - and given they are capital-intensive in nature, force a temporary redistribution of funds that can impinge on the magnitude of dividend increases. Concern, however, is counterintuitive. Why? S&P Global shares a lucrative duopoly with Moody’s, exerting control over global credit ratings. This core ratings business is highly fortified given: 1) government mandates are required to participate, making it virtually impossible for the space to become overcrowded with competitors, such that 2) even if competitors offered customers free ratings, they nevertheless would be drawn to S&P Global or Moody’s ratings given the lower interest rates they can provide as well as their universal approval. These inevitable competitor hurdles, coupled with S&P Global’s reputational edge, forward focus and unique pricing power enjoyed with Moody’s, facilitate the company’s continued stronghold, promising a future of dividend growth ahead.
This week we appeared again on ausbiz to discuss one of our most favored holdings, Costco. We covered the recent special dividend, new CEO appointment, and how Costco navigates its employee relationships. This interview can be viewed here.
