The DivGro Weekly—13.10.23

139 Consecutive dividend increases

This week we received further real-time, tangible evidence of outstanding business progress when we collected our quarterly dividend from FirstService and became entitled to our quarterly dividends from Mastercard, American Tower and Roper Technologies, all significantly higher than this time last year.

Since DivGro's inception we have predicted and benefited from 139 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.2%.

For more than a century, Roper Technologies continues to evidence a masterclass demonstration that opportunity size is important—the general playbook prescribes that bigger is better—but not all-encompassing. Instead, Roper has generated near-peerless returns by operating counterintuitively, differentiating itself by deliberately targeting narrow, mission-critical niche markets. Once it occupies a niche, the remaining market size typically dissuades well-resourced potential competitors. This arms Roper with relative freedom to gradually extend its position in its target markets towards domination. Roper’s niche dominance, combined with the reality that these niches are also mission-critical to their customers (e.g. toll road management software), enables Roper to extract the overwhelming majority of available profit pools from its chosen niches. The repetition of this formula, decade on decade, coupled with an almost limitless runway of possible niches and a readiness to continuously upgrade the composition of its portfolio, allows Roper to continue to deliver significant increases in its dividend—which has risen at 18 per cent per year compounded since 1993.