The DivGro Weekly—25.11.22

112 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 and MarketAxess.

Having marked our calendars, we look forward to receiving our dividends from Microsoft, SBA Communications and Moody's shortly.

Since DivGro's inception we have predicted and benefited from 112 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.4%.

Moody's, together with S&P Global (another DivGro holding) enjoy the privileged position of effective toll-collectors over debt issuance. Since Moody's opinion of creditworthiness requires periodic monitoring, this privilege provides ongoing 'maintenance fees' (or an effective royalty) on the universe of previously rated debt that is still outstanding. This 'installed base' from which Moody's earns its ongoing royalty is not dissimilar from other high-value, must-be-maintained, installed bases we have written about, like in-ground pools, air conditioners and installed accounting software. Further, since companies and governments have a seemingly unending appetite for more funding, and since it is generally easier to roll over or refinance this debt rather than repay it, this profit pool looks set to continue expanding long into the future. This bodes well for Moody's dividend trajectory, having raised its dividend by 700% since 2010.