When I added 294 Scottish Mortgage (LSE: SMT) shares to my portfolio at £6.76 each in June last year, I thought I was making a dire mistake. In fact, I almost sold them straight away. I feared I’d been dazzled by a heroic past performance that it would never repeat.
The Scottish Mortgage Investment Trust flew during the early stages of the US tech stock boom, then lost half its value when the sector crashed in 2022. I can’t resist a bargain, but then I began to wonder. Just because a stock or trust has fallen 50%, doesn’t mean it can’t fall another 50%.
Also, the guiding light behind the trust, James Anderson, had retired. New lead manager Tom Slater talked a good game, but fund managers often do. Also, I was worried by the high number of private, unquoted shares in the portfolio. There was plenty of scope for disaster here.
My Scottish play
But I noticed that whenever investor sentiment jumped, Scottish Mortgage jumped a little higher. So I held on and when it started climbing, I bought 270 more shares three months later at the higher price of £7.34.
Today, I’m much more content with my decision. So far, my shares are up 27.2%. Over one year, the Scottish Mortgage share price is up an impressive 39.74%. But that’s not my only reward. I’m also been getting a small but steady stream of dividends.
Nobody in their right mind thinks of Scottish Mortgage as a dividend stock. A quick check online will show the yield is just 0.47%. Yesterday, it paid me the first dividend of the year. It was worth £14.88. That’s not exactly life changing. It might buy me a pie in a pub (but not a pint to go with it). Still, every little helps.
Those dividends roll up
I also got £9.02 on 15 December last year. A pittance, yes. But it should slowly roll up as Scottish Mortgage has a track record of dividend growth, as my table shows.
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| Dividend per share | 3.25p | 3.42p | 3.59p | 4.10p | 4.24p |
Now here’s the thing. It’s not the only UK company sending me spots of cash from time to time.
This morning, FTSE 100 sportswear retailer JD Sports Fashion sent me £10.42 and GSK paid £22.35. Beauty make-up retailer Warpaint London paid me £28.92 on 5 July. Last month, Unilever paid me £26.45 and Legal & General Group handed me £266.86 (that’s more like it). In May, wealth manager M&G sent me a bumper £408.27.
Plenty of other companies are doing the same. The dividends keep rolling into my portfolio, without me doing anything.
I reinvest every single one back into the same stock, again, without doing anything. I’m getting a steady, passive income and it should grow over time. In a decade or also, after I’ve retired, I might start drawing those dividends as income.
I’ll probably never quite make a million but, step-by-step, I’m getting a little bit closer by the day. And Scottish Mortgage is doing its bit. Mostly with growth, but with a little dividend income too. Let’s hope it continues to do so.
This post was originally published on Motley Fool
