The DivGro Weekly—26.07.24

165 Consecutive dividend increases

Weekly Dividend Progress

This week we received further real-time, tangible evidence of outstanding business progress when Cintas raised its dividend by 15.6%. We also collected our quarterly dividend from Roper and became entitled to our quarterly dividends from Zoetis and Lowe’s, all meaningfully higher than this time last year.

How We Are Tracking

Since DivGro's inception we have predicted and benefited from 165 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.78%.

Distribution

Last week, we paid our 19th consecutive quarterly distribution. Notably, this distribution is 11.2% higher than the same time last year. DivGro has grown its distributions each year by at least a double-digit percentage increase. Our quarterly distribution is already 2.3x higher than our first quarterly distribution paid in January 2020.

Lowe’s

With origins dating back more than 100 years, Lowe’s — together with another DivGro holding Home Depot — has established a legacy of domination across the home repair, maintenance and improvement channel in the US. An entrenched leader, Lowe’s is among the best exemplars of our dividend growth machine in action. After its 1961 IPO, Lowe’s paid its maiden dividend later that year and has since increased its dividend every single year at an annualised rate of approximately 16 per cent, driving a roughly parallel share price escalation of more than 7000x. Together, Lowe’s and Home Depot control north of 30 per cent of their market — a figure that is even more notable in light of the residual pie, comprising many but relatively small enterprises. This profile arms Lowe’s and Home Depot with unmatched scale benefits, including wider inventory; superior supplier terms; location density; national advertising and, of course, the critical clincher: sharper prices. By electing to share these benefits with customers via lowest prices, it becomes effectively impossible for competitors to challenge the Lowe’s/Home Depot duopoly. The fact that homes are actively deteriorating over time (more than half of US homes are more than 40 years old; a key inflection point for accelerated repairs) means that every day the pipeline for future repairs is being replenished. This dynamic, coupled with the company’s relative ease to take extra share from weaker competitors, fortifies the extensive runway ahead of Lowe’s to build on its dividend trajectory.