The DivGro Weekly—21.06.24

163 Consecutive dividend increases

Weekly Dividend Progress

This week we received further real-time, tangible evidence of outstanding business progress when we collected our quarterly dividends from SBA Communications, Alphabet and Cintas, and became entitled to our quarterly dividend from ADP, all meaningfully higher than this time last year.

How We Are Tracking

Since DivGro's inception we have predicted and benefited from 163 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.8%.

SBA Communications

SBA Communications, our rapidly growing, US-centric wireless infrastructure landlord declared its maiden dividend in 2019 — a serendipitous coincidence with the launch of DivGro. It has proven a wonderful omen: SBA has already more than doubled its dividend since. How is that possible? Towers may be costly to build or buy but once in place, they are especially prized assets with first-class business privileges. For one, due to optics, municipalities are generally reluctant to add a second tower, meaning the incumbent tower usually enjoys a near-monopolistic position. This provides towers with immense latitude over their tenants — typically mobile phone carriers — who find themselves sandwiched between a sole tower facility and mobile phone customers who demand always-on, always-optimal mobile coverage. This powerful dynamic often generates long contract terms (up to 15 years) with generous escalators highly favourable to tower owners. Simultaneously, an incumbent tower naturally lends itself to the unique advantage of scaling upwards; it can multiply tenants and enhance output, boosting rent and profitability with minimal additional investment. With this convergence of powerful economics at play, the company is primed for future growth as well as a long and formidable dividend trajectory.