13th Feb 2025 11:23
(Alliance News) - Scottish American Investment Co PLC on Thursday recommended a higher dividend as net asset value per share rose, as it noted risks and opportunities in its outlook.
The Edinburgh-based trust, which invests mainly in equity markets said net asset value per share rose 2.8% to 539.3 pence as at December 31, from 524.5p a year prior.
NAV total return with borrowings at fair value was 6.1% in 2024, underperforming against the market return, for which it cites the FTSE All-World index, of 19.8%.
The company recommended a final dividend of 4.18 pence per share, up 9.9% from 3.80p a year ago.
This brings the total payout for 2024 to 14.88p, up 5.5% from 14.10p in 2023.
"2024 has seen further remarkable progress from investment markets, led by a small number of very large companies in the US, which have dominated both earnings growth and market performance. Markets have also been supported by a generally benign economic backdrop, with the prospect of continuing economic growth, in the US in particular, and moderating interest rates," Scottish American said.
It added: "When the biggest companies in the world index perform strongly and are concentrated in the technology sector, and when the most cyclical companies also perform well, life is challenging for portfolios with a focus on high quality and predictably cash generative businesses. Last year's pattern of performance is unusual, despite the fact that it is a continuation of a phase which began in 2023. And, as last year, the companies which have dominated the market are a handful of very large and generally low yielding technology companies in the US."
Looking ahead, Scottish American expects fewer interest rate cuts and increased protectionism with the election of Donald Trump in the US. Further, the company expects that governments in the UK and EU will be under pressure to consolidate further the public finances.
However, it added: "Opportunities will continue to arise, not least as the benefits of technological progress spread beyond the tech giants. In particular, the board and your managers remain alert to both opportunities and risks arising from the accelerated adoption of artificial intelligence, many of which will be in the broader economy and market. And if higher interest rates force governments to tackle the proliferation of government debt, to reduce regulation and to promote economic growth, that may well be good for performance over the long term."
Scottish American shares were 0.2% higher at 520.00 pence each on Thursday morning in London.
By Tom Budszus, Alliance News slot editor
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