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- Scottish American combines inflation busting dividend with bear-market outperformance
The Scottish American Investment Company (SAINTS) has released its annual results for its financial year ending 31 December 2022.
SAINTS’s investment manager, James Dow, commented:
” Although 2022 felt rather like sailing through a storm, with waves crashing left and right and visibility poor, SAINTS’ portfolio proved pleasingly robust and charted a relatively steady course. The strong companies that constitute the backbone of the portfolio delivered, for the most part, admirably solid compounding in their revenues and profits. The portfolio also generated dividend growth that broadly kept pace with inflation, ensuring shareholders’ real income was largely maintained.
“The company’s property, infrastructure and fixed income investments also held up relatively well. SAINTS has been able to refinance its borrowings, and the Company’s overall borrowing cost has now fallen to 3%, having previously been 8%, which will be a substantial saving going forward.
“Credit for this steady performance should perhaps go more to the seaworthiness of the ship than the skill of its captains: the quality of the holdings shone through rather than any change of course by its managers, given that we made only three new equity investments during the year. But the bottom line is that SAINTS’ shareholders own a portfolio that proved its mettle in 2022 and appears well set for the future. The outlook for the global economy is showing tentative signs of improvement, and as managers we remain optimistic about delivering steady growth in earnings and dividends in 2023 and beyond.
“We would much rather invest shareholders’ capital in companies with good long-term growth prospects, and wait for these storms to pass, than invest in the likes of oil & gas companies where, to the best of our judgement, the long-term outlook for growth in their earnings and dividends is very poor. In the medium-term we expect interest rates and equity valuations to stabilise, while the portfolio’s earnings should continue to compound higher. Ultimately this should drive growth in SAINTS NAV and dividends in the years to come.
“There are no certainties in investing. There can be no guarantee that SAINTS’ capital value and dividends will continue to compound higher in the decade to come as they have in the decade past. But we do believe that, whatever winds may blow, and as far as we are able to ensure as managers, the odds remain skewed strongly in favour of long-term capital appreciation and dividend growth in the years ahead for SAINTS shareholders.”
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