The DivGro Weekly—02.05.25
192 Consecutive dividend increases
Weekly Dividend Progress
This week we received further real-time, tangible evidence of outstanding business progress when Alphabet and Poolcorp increased their dividends by 5% and 4.2% respectively, while Hermès approved the payment of a significantly increased dividend. We also received our quarterly dividends from Danaher and Watsco, both meaningfully higher than this time last year.
How We Are Tracking
Since DivGro's inception we have predicted and benefited from 192 consecutive dividend increases across our portfolio companies, with no decreases. The average rate of these dividend increases is 14.5%.
Hermès
Should you find yourself on the Rue du Faubourg Saint-Honoré, the Parisian epicentre of luxury fashion, you may wonder: where are all the high-net-worth individuals shopping? The answer is Hermès. While other fashion houses maintain sleepy storefronts and gentle foot traffic, at number 24, the atmosphere is electric. Sales assistants are swarmed by shoppers, every cash register boasts a queue, and lucky customers man multiple orange bags because when Hermès calls, carpe diem. At 187 years young, Hermès retains the top rung in the luxury fashion ladder. After more than a decade of ‘handbag wars’, which saw LVMH vie to acquire the brand, Hermès recently eclipsed LVMH’s market value, becoming Europe’s most valuable company, helped by a dividend that has more than doubled in the last few years. So, what makes Hermès all that? Hermès provides customers with extreme perceived value, via prized fabrics, evergreen styles, unparalleled craftsmanship and, critically, the je ne sais quoi, or intangible specialness, that its wearers feel and project when armed with a Birkin or Kelly. Importantly, this intangible benefit translates materially to the brand’s success; Hermès simultaneously enjoys persistent demand and an ability to increase prices. In 2024, sales were up 15%. With an operating profit margin exceeding 40% and a 12 billion euro cash reserve, the luxury house is uniquely positioned to extend its recent outstanding dividend growth.