The DivGro Weekly—08.11.24

171 Consecutive dividend increases

Weekly Dividend Progress

This week we received further real-time, tangible evidence of outstanding business progress when ADP raised its dividend by 10%. We also became entitled to our quarterly dividend from Costco and received our quarterly dividends from Stryker and Watsco, all meaningfully higher than this time last year.

How We Are Tracking

Since DivGro's inception we have predicted and benefited from 171 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.71%.

Costco

What does it take to develop an exemplary dividend record like Costco? The company has grown its dividend each year since 2004 at a compounded rate of around 13 per cent, amplified by periodic and substantial special dividends. Relative to traditional food and general merchandise merchants, Costco enjoys a unique benefit; while their models rely on persistent and expensive advertising to drive traffic, Costco chooses not to advertise. Instead, the company’s 120 million-plus members shop easefully with the knowledge that Costco’s business imperative is to ensure it is the lowest price destination for its members. On this basis, Costco’s members save time and money, circumventing the search for bargain items that is typical of customer experience across rival formats. Plus, thanks to its member data, Costco can easily and efficiently promote periodic specials to its customers. By leveraging its membership base, Costco can cherry pick goods manufacturers or distributors with excess inventory — that uniquely meet the likes and interests of its customers — and offer these wares at unbeatable prices. Such privileges reinforce Costco’s pricing power and member allegiance, placing the company in an echelon of its own, replete with a promising extension of its multi-decade dividend trajectory.