Investment Trust Analyst: It last cut its dividend in 1938 but is Saints’ still a compounding machine


#1

Originally published at: https://whichinvestmenttrust.com/last-cut-its-dividend-1938-is-saints-still-a-compounding-machine/

Scottish American was one of a group of Victorian trusts that financed the development of America, but the management team are trying to demonstrate its relevance to today’s investors as a compounding dividend machine. Fast Facts Established in the 1873 to invest in the leading emerging market of the day – America Focuses on delivering…


#2

I am still two and a half, maybe more decades away from retirement, but I have a fairly large pension fund, and I’m trying to figure out what investing in compounding funds like Scottish American or Saints would, could, might do for me.

What I mean is if I invested in compounding funds, does it mean that in 10, 20 years time I could expect to have a large dividend on my original investment?

I think it would be really helpful if Ballie Giford (not sure I’ve spelled that right) or WhichInvestmentTrust.com could share some past examples of this because I can’t work it out myself. I read the graphs and text in the article that highlighted the extent that the dividend of Saints grew over time and beat inflation, and they were startling, frankly.

But what would they have meant in shillings and pence on say an investment made in Saints, 5, 10, 20 years ago. If you invested £20 or £50k for example, what dividend would you be getting now on that?

I’d love to see examples of that, obviously it would just be illustrations of what might, or could, happen.


#3

That is a good suggestion @matts. I would guess that there might be a compliance reason that stops them from providing projections using past data, but they could at least provide calculators on their websites that provide information like this.

That is a very good article on Saints @whichinvest. It is very detailed in a way that is glossed over often elsewhere, and it describes how they invest very well, I think I understand it enough now to hold them to account in future.

I want to know what they are going to do about the premium though, are they issuing new shares? I wouldn’t buy this on a 5% premium.


#4

I’m not convinced by the Saints strategy. It seems to me that they’re appealing to pensioners, not to younger guys like me.

Also, although the yield is high, you can get a lot higher, with higher capital returns.

It looks like there’s a new team in place and maybe we need to wait a while to see how this turns out. The jury’s out for me here, there are much better Baillie Gifford trusts out there.


#5

Yeah I agree @jonno. Performance is mediocre though it’s not a bad option if you are looking for a dividend. To be fair to them that’s what they say trying to provide, but it doesn’t grab me as it is.

I think @matts’ idea about projections using historical data would be very interesting. Baillie Gifford should do it, and other fund manager too. It is a lot easier to comprehend when you see it in pounds and pence, rather than just inflation.

Why is it on such a high premium though? Can’t just be because its an income trust, not all income trusts are ion a big premium.


#6

I second that suggestion @matts though i’d like to see all fund managers do something like this.

Scottish American doesn’t appeal to me too much because it seems overly focused on the dividend. It’ll be trying to catch the pension investor.

Another trust to consider in the same sector is Henderson International income, slightly higher dividend, and I like that it have nothing invested in the UK, unlike Scottish American.