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DIVIDEND UPDATE

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Since we last wrote, we have again seen the power of the DivGro philosophy in action. More of our holdings continued to announce dividend increases as anticipated by the DivGro system:

CDW +28.8%
Air Lease +15.4%
Nike +11.4%
Roper Technologies +10.8%
Becton Dickinson +2.6%

By way of interest, here is the press release from CDW announcing their very substantial dividend increase:




Since inception on 15 August 2019 we are pleased to advise that the DivGro system has now registered 13 dividend increases. In our minds, since dividend behavior is the key driver of the DivGro system, we think these increases are indicative of a strengthening and meaningful track record. 




We also want to highlight two positions we have recently exited. While we generally prefer to hold for extended periods, in the case of Texas Roadhouse (TXRH), the stock price climbed more sharply and quickly than we felt warranted by the rate of improvement in the business and our expectation for the underlying dividend growth velocity so we realized a profit of 11%. We will revisit Texas Roadhouse if our valuation relative to our dividend expectations becomes more favorable again.

We also exited our position in Becton Dickinson (BDX) but for a different reason. Our view remains that BDX is a superb company with an incredible track record - last week BDX announced its 48th consecutive annual dividend increase, but at a relatively constrained rate of 2.6%. Two years ago BDX made a huge acquisition of Bard which has proved wonderfully successful. Following the acquisition BDX has been deleveraging aggressively, and we took the view that it had already reached the point where it could resume its usual pace of dividend increases around 10% per year. BDX has taken the more conservative route of continuing to deleverage further, leading to the more modest recent dividend increase. Accordingly, we took a decent profit on BDX and will look to re-enter when we believe more substantial dividend increases are imminent. 

We look forward to updating you next with more dividend increases.

Sincerely,

Jonathan & Barney 
In case you missed our last update we have included it here:
 
During October we again saw the power of the DivGro philosophy in action. More of our holdings continued to announce dividend increases as anticipated by the DivGro system:

Starbucks +13.9%
Visa +20.0%
Cintas +24.4%
Abbvie +10.3%

We thought it might be a nice idea to show you how and where these increases are described by the companies themselves. By way of illustration here is the Visa release:
 

 
Unlike prices which fluctuate every day, the essence of the DivGro system is that these dividend increases are received in real cash into our account. We look forward to paying the maiden DivGro dividend distribution soon.

With this kind of dividend growth even a modest initial yield can grow materially over time.

Achieving dynamic dividend growth is most important to us because it increases our cash flow which ultimately drives long term capital appreciation.  

Sincerely,

Jonathan & Barney
Disclaimer:
 
DivGro Pty Ltd is a Corporate Authorised Representative (CAR No. 1277044) of Lanterne Fund Services Pty Ltd (AFSL No. 238198). The DivGro Fund is open to wholesale investors only, as defined in the Corporations Act 2001 (Cth). The Company is not authorised to provide financial product advice to retail clients and information provided does not constitute financial product advice to retail clients.

The information provided is for general information purposes only, and does not take into account the personal circumstances or needs of investors. The Company and its directors or employees or associates endeavour to ensure that the information is accurate as at the time of its publication. Notwithstanding this, the Company excludes any representation or warranty as to the accuracy, reliability, or completeness of the information contained on the company website and published documents.

The past results of the Company's investment strategy do not necessarily guarantee the future performance or profitability of any investment strategies devised or suggested by the Company.

The Company, and its directors or employees or associates, do not guarantee the performance of any financial product or investment decision made in reliance of any material in this document. The Company does not accept any loss or liability which may be suffered by a reader of this document.
Copyright © 2019 Divgo Pty Limited, All rights reserved.

Our mailing address is:
Suite 3, 23 Newcastle Street
Rose Bay, NSW 2029

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Divgro Pty Limited · Level 10, Hudson House · 131 Macquarie Street · Sydney, NSW 2000 · Australia

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