Investment trusts are popular in the UK and for good reason. With these products, one can get access to a broad range of shares for a low annual fee.
Here, I’m going to highlight three ‘Dividend Hero’ investment trusts that investors may want to consider for 2024 and beyond. These are trusts that have increased their dividends every year for at least 20 consecutive years.
Alliance Trust
First up is Alliance Trust (LSE: ATST).
This trust is unique. That’s because its investment manager, Willis Towers Watson, has appointed 10 different professional investors (all with different styles) to pick stocks for the portfolio.
Thanks to this approach, investors get highly-focused stock picking. They also benefit from increased diversification.
I really like the portfolio here. In the top 20 holdings, there are plenty of big names such as Alphabet and Amazon.
However, there are also some more under-the-radar businesses such as Latin American e-commerce powerhouse MercadoLibre and Dutch semiconductor equipment company ASML.
It’s worth noting that this trust does have a large weighting to North America, which adds some risk.
I’m comfortable with this exposure, however, as the US is home to many of the world’s most dominant businesses today.
The yield here is about 2.5%, while ongoing charges are 0.61%.
Scottish American Investment Company
Next, we have Scottish American Investment Company (LSE: SAIN).
What I like about this trust – which is designed to be a core investment for private investors seeking income – is that it’s very diversified. Not only does it offer exposure to a broad range of equity markets (US, Europe, Asia, Australia, etc.) but it also provides some exposure to other asset classes such as bonds and property.
Within the equity component, the trust owns a lot of high-quality businesses. For example, the top 10 holdings include diabetes drug powerhouse Novo Nordisk, tech giant Microsoft, and consumer staples champion PepsiCo – three world-class businesses.
I’ll point out that returns here in recent years have been a little below those of the product’s benchmark due to the trust’s focus on income. We can’t rule out further underperformance going forward.
I think it could play a role in a diversified portfolio, however.
The yield is about 2.7%, while ongoing charges are 0.59%.
Scottish Mortgage
Finally, I want to highlight Scottish Mortgage Investment Trust (LSE: SMT).
This trust has been a bit of a dog in recent years.
That’s because it has a ‘disruptive growth’ focus, and a lot of stocks in this area of the market have been slammed as interest rates have risen.
I think it may have bottomed though.
Recently, the Scottish Mortgage share price has stabilised. And with interest rates likely to be cut in 2024, the prospects for a lot of its holdings look attractive.
One holding in particular that’s worth highlighting here is SpaceX – the privately-owned space company founded by Tesla CEO Elon Musk. It has huge potential. Recently, it was valued at $175bn. That’s more than any FTSE 100 company is worth.
Now, Scottish Mortgage is a higher-risk trust. Many of its holdings are volatile.
For those seeking long-term growth, however, I think it’s worth considering as we head towards 2024.
The yield is about 0.5%, while the ongoing charge is 0.34%.
