DivGro Pty Ltd is a boutique global investment management firm that harnesses the often ignored and improperly understood power of rising dividends.
The essence of our approach is:
identify companies we believe will raise their dividend
isolate those privileged business models that enable material dividend increases to be sustained for many years
encourage holding discipline via our 90 day cash distribution feedback loop
Powered by rising dividends, this approach is likely to achieve high capital growth and helps overcome the emotional difficulties associated with volatile price movements.
The DivGro method targets companies that raise their dividend by a material amount each year. The DivGro method is an extension of the work of three MIT economics professors who illustrated that:
Dividends are easier to predict than earnings and stock prices
As a category, dividend raisers tend to outperform; and
That over the long-term, stock prices tend to reflect the change in dividend.
This Nobel prize winning work has been proven in diverse market conditions and jurisdictions, including the successful implementation by our managers for many years.
IT IS UNDERSTANDABLE
Simply put, asset prices tend to reflect the income that they produce over time, whether distributed or reinvested.
In order to sustainably and consistently increase their dividend, companies must occupy a privileged position in their market, have superior cash flow and exhibit a strong alignment with their shareholders.
Our approach is easily understood, but hard to replicate.
IT IS REASSURING
We distribute a cash dividend to our investors every 90 days. This provides investors tangible reinforcement which builds conviction and holding discipline. This ensures our investors are able to remain invested long enough to achieve outsized returns despite market volatility.