The DivGro Weekly—07.07.23

133 Consecutive dividend increases

This week we received further real-time, tangible evidence of outstanding business progress when we collected our quarterly dividend from Nike, and became entitled to our quarterly dividends from FirstService, Mastercard and Heico, all significantly higher than this time last year.

Since DivGro's inception we have predicted and benefited from 133 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.3%.

Heico, which develops highly engineered aftermarket parts for the aviation and aerospace industries, recently acquired its principal competitor which for many years had been held in various private equity funds. Heico seldom - if indeed ever - participates in public auctions but felt this acquisition opportunity too attractive to pass over. With modest overlap in product, distribution channels and customers, this acquisition magnifies Heico's footprint materially, adding a further 5,000 aftermarket parts to its current catalogue of about 14,000 and significantly expanding its sales and distribution force. Heico already enjoys a structural advantage over its OEM competitors, which are forced to recover their significant upfront R&D costs via the replacement parts channel. Heico, as an aftermarket manufacturer unburdened by these upfront R&D costs, offers equivalent quality parts but at a significantly lower price, usually saving customers 30%-50%. With most modern aircraft needing millions of parts, this range extension and cross-sell opportunity provides Heico an exceptional opportunity to extend its stellar dividend growth record, which has in turn powered its share price higher by more than 650x since 1990.