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When I added 294 shares of Scottish Mortgage (LSE: SMT) to my portfolio at £6.76 per share last June, I thought I'd made a huge mistake – in fact, I almost sold the shares straight away, fearing I'd become seduced by past fantastic performance that could never be replicated.
Scottish Mortgage Investment Trust soared during the early stages of the US tech stock boom, only to lose 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 falls by 50% doesn't mean it can't fall another 50%.
Also, the trust's leader, James Anderson, had retired. The new lead manager, Tom Slater, said good things, but fund managers often do. There were also concerns about the large number of unlisted, privately held shares in the portfolio. There was plenty of room for disaster here.
My Scottish Plays
However, I noticed that every time investor sentiment spiked, the Scottish Mortgage share price would also rise a bit, so I held on and, when the share price started to rise, bought a further 270 shares three months later at a high of £7.34.
Now I'm much happier with my decision. So far my shares are up 27.2%. In a year, Scottish Mortgage's share price is up 39.74%. But my rewards don't end there. I'm also receiving a small but steady dividend.
No one in their right mind would consider Scottish Mortgage a dividend stock. A quick check online shows it's yielding just 0.47%. Yesterday the first dividend of the year was paid, worth £14.88. Not a life-changing amount – enough to buy a pie at the pub (but not a pint of beer). Still, every little helps.
Dividends are piling up
I too received £9.02 on the 15th December last year – a small amount, to be sure, but as my table shows, Scottish Mortgage has a track record of increasing dividends, so this should add up over time.
2020
2021
2022
2023
2024
Dividend per share
3.25 pence
3.42p
3.59 pence
4.10p
Page 4.24
Now, here's the thing: this isn't the only UK company that sends me a little cash every now and then.
The story continues
This morning, FTSE 100 sportswear retailer JD Sports Fashion paid me £10.42 and GSK paid me £22.35. On 5 July, cosmetics retailer Warpaint London paid me £28.92. Last month, Unilever paid me £26.45 and Legal & General Group paid me (close to) £266.86. In May, asset management firm M&G sent me a whopping £408.27.
Many other companies do the same thing, and the dividends flow into my portfolio without me having to do anything.
Do nothing and reinvest it all back into the same stocks again. You'll have a steady, passive income that will grow over time. In 10 years, or even after you retire, you might start receiving dividends as an income.
You'll probably never make a million dollars, but every single day, one step at a time, you get a little closer. And Scottish Mortgage is doing its part. It's mostly growth, but also a little bit of dividend income. Let's hope it continues to do that.
This article first appeared on The Motley Fool UK “My Scottish Mortgage shares make me £14.88 profit – another step towards making $1 million.”
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Harvey Jones has investments in GSK, JD Sports Fashion, Legal & General Group, M&G, Scottish Mortgage Investment Trust and Warpaint London. The Motley Fool UK recommends GSK, M&G and Warpaint London. Views expressed on companies mentioned in this article are those of the author and may differ from official recommendations we make in subscription services such as Share Advisor, Hidden Winners or Pro. At The Motley Fool we believe considering a diverse range of insights makes us better investors.
Motley Fool UK 2024