The DivGro Weekly—14.08.26
222 Consecutive dividend increases
Weekly Dividend Progress
This week we received further real-time, tangible evidence of outstanding business progress when we collected our quarterly dividends from Costco, Mastercard and American Express and became entitled to our quarterly dividend from Visa, all meaningfully higher than this time last year.
How We Are Tracking
Since DivGro's inception we have predicted and benefited from 222 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 13.9%.
Costco
Costco, held in DivGro since inception, has increased its dividend consecutively for 21 years at around 13% per annum compounded. This rate understates Costco’s true dividend prowess since it has periodically paid additional significant special dividends. Costco carries a narrower assortment than most competitors but concentrates on items its members really want. This allows it to be the largest global purchaser of those goods, thereby sourcing them at the lowest possible cost, and sharing this benefit with members via perennially low prices. But Costco differentiates itself in many other ways. For example: Costco pays its hourly workers much more than competitors; invests in upskilling them and adds responsibility if they so wish; and provides better healthcare plans and longer holiday allowances. The net result is the industry’s lowest employee turnover. Average hourly employees spend about 15 years with Costco, with many staying multiple decades and even entire working careers. Lower attrition means less time, money and distraction spent on employee turnover and recruitment; more motivated employees generate better customer interactions; and this in turn fosters greater customer loyalty. This combination of obvious and more subtle advantages makes Costco extremely difficult to compete with — an insight the late Charlie Munger often mentioned about his long-time favourite stock — ideally positioning Costco to continue to expand its footprint, grow profits and increase its dividends.