The DivGro Weekly—24.05.24

162 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 Abbott and Texas Instruments and became entitled to our quarterly dividends from Moody’s, MSCI, Visa, Wingstop and Zoetis, all meaningfully higher than this time last year.

How We Are Tracking

Since DivGro's inception we have predicted and benefited from 162 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.9%.

Texas Instruments

With origins dating back to the 1930s, Texas Instruments (TI) has cultivated one of the most compelling dividend growth records, persistently increasing its dividend by nearly 20 per cent per annum compounded over the last 20 years. Perhaps surprising on the surface — TI operates in the oft perceived ‘old-world’ sector of analog chips — its performance is actually demonstrative of how successful a dominant, highly scaled and expertly managed company can be, irrespective of the supposed interest or appeal of its subsector. How does TI continue to extract profits in an increasingly changing world? A trifecta of overwhelming leadership across cost, quality and financial strength. Since analog chips do not obsolesce rapidly, TI’s financial strength enables the company to invest heavily in its inventory — a privilege competitors are not resourced to exercise themselves. This signals to current and prospective customers that only TI provides the best and safest option to engineer into their processes. In fact, at times TI has been the only and optimal producer able to reliably supply the market, generating windfall profits together with incremental market share. Given TI’s products are ‘designed in’ to the products of their customers and represent only a fraction of the total cost of such products, TI’s chips become increasingly ingrained, consolidating TI’s market share and foreshadowing the company’s enhanced profitability and superb future dividend growth.