Scottish Mortgage Investment Trust (LSE: SMT) has been in the news lately after its shares had a bit of a rollercoaster ride, falling to 950p at the beginning of March. Since then, its share price has showed signs of clawing back some of its earlier losses.
One of the UK’s largest investment trusts, in my opinion Scottish Mortgage is famous for two things: its holdings – Tesla, Amazon and Alibaba to name but a few stellar US tech stocks – and the c.365% rise in its shares over the past five years. However, sadly not for its dividend of 0.3%, according to the latest ‘divided heroes’ table from the Association of Investment Companies (AIC).
So, if I’m looking for a bigger dividend, should I turn to Scottish Mortgage’s peers in the Global Sector? I will indeed, as I look to expand my SIPP portfolio!
Several of Scottish Mortgage’s peers in the Global sector deliver a far better dividend. For example, Scottish Investment Trust (LSE: SCIN), which has a substantial 3.2% yield at the time of writing, or Witan Investment Trust (LSE: WTAN) which has a yield of 2.4%. Both offer a marginally better dividend than Scottish Mortgage, but their shares’ performance has varied over a five-year period. A rise of over 43.5% over a five-year period is pretty healthy for Witan Investment Trust’s share price, and Scottish Investment’s shares have risen a modest 22% in the past five years.
Witan Investment Trust is less technology focused compared to Scottish Mortgage Investment Trust, preferring to focus on stalwarts like Tesco and Unilever. Scottish Investment Trust’s holdings focus on different companies, like US banking giant Wells Fargo and UK telecoms leviathan BT.
Scottish Investment Trust’s objective is to “provide long-term above average returns through a diversified portfolio of international equities and to achieve dividend growth ahead of UK inflation”. Meanwhile, Witan’s objective is to “achieve an investment total return exceeding that of the benchmark of the Company over the longer term, together with growth in the dividend ahead of inflation through active investment in global equities”.
Both Witan and Scottish Investment Trust are very much investments for the long term, with both companies looking to achieve dividend growth ahead of inflation, which is more than can be said for their peer Scottish Mortgage Investment Trust.
Although Scottish Mortgage has succeeded in an impressive share price increase over the years, it has recently been knocked back due to the volatility of Tesla’s and Amazon’s shares which forms a significant part of its holdings – a weighting of 8.89% for Tesla and a weighting of 6.55% for Amazon. This volatility might be repeated in the future.