The DivGro Weekly—08.09.23

135 Consecutive dividend increases

This week we received further real-time, tangible evidence of outstanding business progress when we collected our quarterly dividends from Costco, Wingstop and Moody's, and became entitled to our quarterly dividend from Nike, all significantly higher than this time last year.

Since DivGro's inception we have predicted and benefited from 135 consecutive dividend increases across our portfolio companies. The average rate of these dividend increases is 15.4%.

With heritage tracing back more than a century, Moody's, together with S&P Global (another DivGro holding) enjoy a virtual lock on the market for global debt ratings. So deep is this rare privilege that it is widely understood that if a new competitor emerged and offered its ratings services for free, customers would almost certainly still prefer to rather pay Moody's and S&P. This is because without a Moody's and/or S&P rating, the interest rate on the same security would have to be significantly higher to try tempt buyers, the majority of which are in any case prohibited from considering debt securities which do not carry Moody's or S&P stamps of approval. This structural privilege translates into Moody's remarkable profitability profile, earning more than 50 cents of net profit from each $1 of ratings revenue. Moody's extreme profitability, coupled with its ability to leverage its reputational advantage into fast-growing adjacencies such as climate standard adherence, have underpinned Moody's impressive dividend growth record which looks set to continue, having already increased its dividend by 770% since 2010.