The DivGro Weekly—24.11.23

143 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 and became entitled to our quarterly dividends from Wingstop and Moody's, all higher than this time last year. 

Since DivGro's inception we have predicted and benefited from 143 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.1%.

Costco, which we covered in a recent ausbiz interview, has developed a potent dividend record that has buttressed its equally remarkable stock performance. Its 'secret sauce'? Costco upended the traditional, fractured relationship between retailer and supplier, where both jostle for supremacy. Instead of maximizing merchandising profits, Costco charges customers an annual fee, a strategy which enables Costco to counter-position itself as a genuine customer advocate, and accordingly, to work with suppliers rather than against them to optimize customer benefit. Costco has finessed this strategy; on many lines it has promised exclusivity to those suppliers who offer the best product and sharpest price. This approach solidifies Costco's upper hand: customers enjoy persistently lower prices, intensifying their loyalty and saving Costco the need to advertise. Price leadership, unwavering loyalty and a global opportunity to expand the 120-million membership base differentiate Costco's lucrative formula, providing significant runway to extend its outstanding dividend growth record, exceeding 13 per cent per annum compounded for the last 20 years (plus several hefty special dividends along the way).