“Focus on the likelihood of disruption of the moat rather than growth”
– Sir Chris Hohn, The Children’s Investment Fund
arvy’s teaser: A business that is so predictable that it is almost boring – and that is precisely the point. RELX is growing quietly through subscriptions, switching costs, and economies of scale. A true dividend aristocrat hiding in plain sight.
A dividend aristocrat.
And a low-uncertainty business.
Sounds like the perfect match, doesn’t it?
Or maybe too good to be true? A bit like the mythical “Eierlegende Wollmilchsau” — the pig that lays eggs, gives milk, and grows wool all at once. But not quite. These businesses do exist. They typically share a key set of characteristics — predictability, stability, and the kind of resilience that allows them to raise dividends year after year, through recessions and booms alike. To be a dividend aristocrat, you must increase your dividend continuously for at least 25 years. One company that fits the bill? A global provider of information, analytics, and decision-support tools for professionals across law, science, risk, and finance.
Old-school investors might remember its former name: Reed Elsevier.
But today?
RELX.
Chart 1: RELX revenue by segment
Source: RELX, annual report
Recurring and Sticky Business in Nature
RELX generates revenue primarily by creating and selling access to curated information databases, advanced analytics, and scientific journals – alongside hosting major trade shows and conferences.
The company operates across four key segments (chart 1):
- Scientific, Technical & Medical (STM): Tools for researchers, scientists, and healthcare professionals to advance science and improve health outcomes.
- Risk: Analytics to manage risks, prevent fraud, and optimize operations in industries like finance, insurance, and aviation.
- Legal: Tools for lawyers and corporations to enhance legal research, case outcomes, and compliance.
- Exhibitions: Events like trade shows and conferences. Ever heard of German FIBO or New York Comic Con? Yup, those are RELX productions.
Their most recognizable product? Likely LexisNexis.
In risk analytics, LexisNexis Digital Identity Network processes 345 million transactions per day to verify identities and prevent fraud – used by over 150,000 websites and apps. In the legal segment, Lexis+ AI is used by 90% of the world’s top 500 law firms.
Almost everything RELX offers is now digital – print is basically a footnote. Most products are sold through subscription, accounting for roughly 55% of total revenue. But here’s the kicker: most of the remaining 45% of transactional revenue also comes from long-term contracts with usage-based pricing. In other words – essentially recurring (chart 2).
That means the business is incredibly sticky and highly predictable.
Sounds familiar to long-time readers of arvy’s Weekly?
A company that once relied on print… now fully digital… built on a diversified, subscription-heavy model with top-tier global clients?
Yes – its biggest peer is a name that’s been in the arvy portfolio for years, too: Wolters Kluwer.
Together with Thomson Reuters and Clarivate, these companies form a quiet but powerful oligopoly.
And the best part?
They don’t go to war. Each one dominates its own niche. Friendly competitors.
And we’re just getting started.
Chart 2: RELX Revenue, format, geographical market, type
Source: RELX, annual report
“We Always Did it This Way”
RELX’s products usually account for less than 1% of their customers’ total cost base.
Know what that means?
There’s barely any incentive to switch. Especially when users have relied on RELX’s tools throughout their careers—and in many cases, even during university.
Familiarity is sticky.
The hassle of learning a new system, the risk of disrupting mission-critical workflows, and the potential cost of transition all add up. And for what? A minimal saving? That’s not where meaningful cost efficiencies come from.
So, most companies don’t even think about switching.
This mindset? It reminds me of that old classic: “We always did it this way—why change?”
Normally, I can’t stand that saying.
But as an investor in RELX?
I absolutely love it.
Why? One word: retention. My favorite metric in subscription-based and software businesses. RELX doesn’t disclose it, but it’s widely understood to be in the mid-to-high 90s.
That screams switching costs. That screams customer lock-in.
And that means two big things: First, RELX has a strong moat. Actually, three moats: intangible assets (brand + proprietary data), switching costs, and a cost advantage from scale and integration.
Second, even though the business only grows revenue organically at mid-single-digit rates, it does so with very low disruption risk. That stability fuels reliable capital returns – like 25 consecutive years of dividend increases (chart 3), plus regular share buybacks.
If you’re wondering: yes, Wolters Kluwer meets these requirements as well.
No worries – we at arvy aren’t turning into dividend fanatics.
RELX yields a modest 1.6%, which is perfect. The rest is reinvested into a business that compounds returns at high teen rates – and possibly above 20% soon.
All said and done, this is a textbook “Good Story”. A dividend aristocrat with low uncertainty.
And just like clockwork – it shows up in the “Good Chart”.
Chart 3: RELX’s annual dividend has increased over the past 25 years
Source: Koyfin
Quality Has its Price
A sticky, subscription-based business model with sky-high retention and steady growth? Check.
An oligopoly where each player has a distinct edge? Check.
A dividend aristocrat with 25 straight years of increases? Check.
High returns on invested capital sustained over years? Check.
Structural tailwinds from digitalization, data, and risk management? Check.
Low leverage? Also check.
A “Good Chart” that runs from the lower left corner to the upper right corner? Check.
Mhm.
Coming full circle to the idea of an “Eierlegende Wollmilchsau” – a business that seemingly does it all – the case for RELX sounds almost too good, doesn’t it?
And the market knows it. Because there’s always a catch.
In the case of RELX?
Quality has its price.
Chart 4: RELX and Wolters Kluwer over the last ten years, in USD
Source: TradingView
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