The DivGro Weekly—14.07.23

133 Consecutive dividend increases

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

Next week we will pay our 15th consecutive quarterly distribution. This distribution is 12.1% higher than this time last year. DivGro has increased its distributions by a double-digit percentage every year since inception. Compared to our first distribution paid in January 2020, this distribution is 2.1x higher.

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%.

American Tower (AMT), our dominant wireless infrastructure landlord, benefits from the fact that nearly all of its towers are effectively localized mini-monopolies. This is because municipalities seldom allow more than one tower in any particular locality, so if a wireless operator wants coverage it must rent a slot on the local tower to host its transmission equipment. Coupled with an insatiable demand for mobile data, these dynamics provide AMT with significant bargaining power relative to its customers, typically the mobile telecommunication service providers. Here AMT takes the long view, offering attractive rates upfront in return for long-term (often up to 15 years) contracts with substantial pre-agreed annual escalators. As these lease rates escalate, and since operators tend to require more tower slots to accommodate faster and more reliable coverage over time, towers trend towards super-profitability in later years. This profitability profile, now covering 226,000 towers, has enabled AMT to raise its dividend at an annualized compounded rate near 20% since 2012, and provides high visibility underwriting its long-term future.