By Mark McSherry
Baillie Gifford’s £1 billion investment trust Scottish American Investment Company (SAINTS) said its net asset value (NAV) total return was 5.5% for the first six months of 2024, while the FTSE All-World Index returned 12.2% over the same period.
The fund declared a second interim dividend of 3.55p. “This is a 2.9% increase on the equivalent dividend last year, which compares to inflation of 2.0% (being the CPI increase for the year to 30 June 2024),” said SAINTS.
The fund aims to be “a core investment for private investors seeking income.” Its objective is to grow its dividend at a faster rate than inflation by increasing capital and growing income.
The focus of the portfolio is on global stocks but investments are also made in bonds, property and other asset types.
The trust’s biggest stock holdings at June 30 included pharmaceutical group Novo Nordisk, Microsoft, air conditioning, heating and refrigeration giant Watsco, Taiwan Semiconductor Manufacturing, industrial supplies group Fastenal, Procter & Gamble, engineering firm Atlas Copco, Apple, asset management firm Partners Group, and Schneider Electric.
The manager of the fund is former Scotsman reporter James Dow, with Ross Mathison deputy manager.
“SAINTS’ NAV (net asset value) per share reached a record level in the first half of the year,” said Baillie Gifford.
“The underlying growth of the portfolio remains strong, if a little more ‘tortoise’ than the market’s ‘hare’. We remain staunch believers that focusing on companies which steadily compound their earnings and dividends ever-higher will stand SAINTS’ shareholders in good stead in the long-term.
“Ultimately, we expect this approach to drive not only real capital growth in the portfolio, but also inflation-beating income growth. This is core to SAINTS’ objectives: a resilient dividend which grows ahead of UK inflation.
“All of the equity holdings pay dividends, and over time we expect these dividends to follow earnings growth, underpinning SAINTS’ ability to pay a growing dividend to shareholders backed by natural income.
“At this half-way point, it is always a little unclear exactly how SAINTS’ income growth will play out in the remainder of the year.
“On the one hand portfolio earnings and dividend growth has been robust. But on the other exchange rates remain an unknown, and recently we have seen Sterling strengthening. As most of SAINTS’ investments are outside the UK, this introduces uncertainty to the growth rate in income.
“However, the Company is able to draw on reserves if necessary: an advantage of the investment trust structure.
“With UK inflation trending down towards 2%, we are optimistic that income growth from SAINTS’ investments should once again allow the Board to increase the dividend at a rate above inflation.
“In the meantime your managers will continue to steer the portfolio in pursuit of steady growth, and we will report back again at the full year results.”