The DivGro Weekly—31.03.23

130 Consecutive dividend increases

This week we received further real-time, tangible evidence of outstanding business progress when we collected our quarterly dividends from Pool Corp, Wingstop and Domino's Pizza, all significantly higher than this time last year.

Having marked our calendars, we look forward to receiving our Stryker dividend shortly.

Since DivGro's inception we have predicted and benefited from 130 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.5%.

Domino's, which recently increased its dividend by a further 10%, was designed from inception in 1960 to optimise for home delivery (unlike most competitors which didn't). This is relevant because of the current upheaval among the so-called delivery aggregators whose models are moving away from subsidising delivery towards profitability. Those aggregators who survive this shake out are increasing their fees towards recovering their true costs and profiting from providing the delivery service. This will have an outsized impact on low value orders which compete with Domino's because an extra $5 delivery fee on top of a $15 meal is significant (unlike the relatively lower percentage impact of such fees on higher value orders). Although Domino's has used aggregators to an extent, this shift will play directly into Domino's strengths, having mastered cost-effective self-sourced delivery for decades before aggregators emerged. This bodes well for Domino's to extend its impressive dividend growth trajectory which has delivered a 6-fold dividend increase since 2013.