The DivGro Weekly—26.05.23

132 Consecutive dividend increases

This week we received further real-time, tangible evidence of outstanding business progress when we collected our quarterly dividends from Costco and MarketAxess, both higher than this time last year.

Having marked our calendars, we also look forward to shortly receiving our quarterly dividends from SBA Communications, Wingstop and S&P Global, all significantly higher than the same time last year.

Since DivGro's inception we have predicted and benefited from 132 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.4%.

S&P Global (SPGI), with origins tracing back to 1860, evidences how sustainably lucrative it can be when the market structure for very high value services comprises an effective duopoly with only two primary participants. In the core ratings business SPGI competes (or rather shares the market) with Moody's (another DivGro holding), while in financial indices and data services it primarily does so with MSCI (also a DivGro holding). The ratings business is even further protected because in many countries, including the US, a government mandate is required to participate, and only a handful have ever been issued. These structural privileges enable SPGI to earn more than 50c of profit from each $1 of sales, and counter to economic theory which suggests this should gradually be competed away, SPGI's enviable profitability keeps trending upwards over time. These time-reinforced dynamics have underpinned SPGI‘s 50-year record of continuous, significant annual dividend increases, which look set to extend long into the future.