The DivGro Weekly—19.07.24

164 Consecutive dividend increases

Weekly Dividend Progress

This week we received further real-time, tangible evidence of outstanding business progress when we collected our dividends from Heico and Intuit and became entitled to our quarterly dividends from Abbott and Watsco, all meaningfully higher than this time last year.

How We Are Tracking

Since DivGro's inception we have predicted and benefited from 164 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.8%.

Watsco

Watsco has surpassed a remarkable achievement: multiplying its dividend more than an incredible 100 times since 2000, in parallel with a spectacular ascent in its share price. Given it is the dominant force within the HVAC distribution and aftermarket channel in North America, Watsco is larger and more omnipresent than its serious competitors combined. This size advantage translates into key scale benefits that are doubly hard to replicate and overcome, including superior supplier terms; wider and lower-priced inventory; higher store location density; superior service and highly efficient backend technology systems. Together, these benefits enable HVAC servicepeople to find what they need - whether new or aftermarket - more easily, more cheaply and much faster, all while encountering superior service. These experiential touchpoints are relevant in any business but are especially critical in harsher climates, where readily available heating or cooling is indispensable. Watsco also stands to benefit disproportionately on the demand side as an installed base of 110 million HVAC units age and, simultaneously, American households gain awareness of the significant environmental and financial savings achievable via an upgrade to modern HVAC systems. This backlog generates a potentially endless runway for Watsco to convert over time, providing a strong tailwind to accelerate its dividend trajectory in the future.