The DivGro Weekly—10.11.23

141 Consecutive dividend increases

This week we received further real-time, tangible evidence of outstanding business progress when ADP increased its dividend by 12%. We also collected our quarterly dividends from Lowe's and Mastercard, and became entitled to our quarterly dividends from Costco, Poolcorp and MarketAxess, all higher than this time last year.

Since DivGro's inception we have predicted and benefited from 141 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.2%.

Lowe’s, our home improvement juggernaut, is an exemplary proof of our dividend growth strategy in action. Why? Since 1961, Lowe’s has grown its dividend every year at around 16 per cent per annum compounded, driving a concurrent share price increase of more than 7000x. Like Home Depot, a companion DivGro holding, Lowe’s benefits daily from the steady deterioration of homes that inevitably require necessary—and often unending/ongoing—maintenance and repair. Together, Home Depot and Lowe’s take about 30 per cent of spending in this sector, meaning their sales are effectively locked in as homes age over time. Higher interest rates may slow this activity, but only for so long; critical repair and maintenance cannot be indefinitely postponed. Notwithstanding ongoing repairs baked into Lowe’s future, the company refuses to rest on its laurels: to turbocharge its profitability metrics, Lowe’s initiated a multi-year efficiency drive in 2018. Since then, Lowe’s has almost doubled its net profit margins and has deduced its best years lie ahead, intimating its already magnificent dividend growth record looks set to continue.