Scottish American Investment Company (SAINTS) aims to offer investors real dividend growth through increasing income and capital over the long term. The portfolio is predominantly comprised of equities, but the manager also has the capacity to invest in bonds, property and other asset classes.
James Dow and Toby Ross manage the portfolio, searching for companies with a dependable yield and good growth prospects. They believe that companies which are committed to paying out dividends are generally managed better and utilise their capital more appropriately.
Since the shift in strategy in 2015, when the managers moved from focussing purely on income to dividend growth, the trust has consistently outperformed the benchmark and its peer group. As can be seen in the Performance section, over the five years to 18 March 2020 the trust has generated NAV total returns of 60.7%, in comparison to 24.9% from the AIC Global Equity Income sector and 41.4% from the FTSE All-World. In fact, the trust has only underperformed the benchmark in one of the past five calendar years, and this was by just 0.2% in 2016.
As we discuss in the Dividend section, SAINTS’s record for dividend growth is as impressive as its history for capital appreciation. The trust has grown its dividend every year for the last 40 years, and has done so at a rate equivalent to 2.5% per annum over the last five. Currently the trust is yielding 3.8%, the lowest in the sector; however, this is perhaps inevitable given the trust also focusses on capital appreciation.
SAINTS has consistently traded on a premium over the past three years, trading in a range between a premium of about 6% and a discount of around the same level. However, at the time of writing the recent uncertainty has seen the trust slip to a discount of more than 7%.