October has been a busy buying month for me. Whether they sell sausage rolls or software, I’ve added the shares of multiple companies to my Stocks & Shares ISA.
Here are two of those stocks that are listed on the FTSE 250.
A high street staple
First up is Greggs (LSE: GRG), a new addition to my ISA. The bakery chain needs no introduction really, so I’ll just go straight into why I bought some shares.
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Some pundits have been worried about “peak Greggs“, a time when growth slows due to the UK being fully saturated with the firm’s shops.
However, the company has displayed an impressive ability to just keep growing. Its bakeries are popping up everywhere people are on the move, notably airports, train stations, and petrol stations. And I can now get its food delivered to me on the Uber Eats app as well as Just Eat (I’m tempted, right now).
Plus, unlike many high street retailers, Greggs has managed to shrug off the cost-of-living crisis. It has been taking market share as people search out reasonably priced food.
International growth could be on the cards again, though that opens up risks of failure and higher costs.
Long term, I think franchising will become a bigger slice of the pie. That’s because this model — straight out of the McDonald’s playbook — gives it an opportunity to grow at a lower capital cost.
Income again and again
Next, I topped up my holding in Scottish American Investment Company (LSE: SAIN), or SAINTS as it’s often referred to. There are a few reasons why I like this 150-year-old investment trust.
First, SAINTS is a Dividend Hero, which means that it has has consistently increased its dividend for 20 or more years in a row. Indeed, it hasn’t cut its dividend since 1938, just before the Second World War!
Also, I like the structure of investment trusts. They’re able to retain 15% of the income they receive each year and have the flexibility to use that to boost dividends in tougher years. That’s why the trust was able to raise its dividend even during the financial crisis and Covid pandemic.
Lastly, it invests globally and focuses on sustainable dividend growth rather than high yield. So we have a top-notch portfolio of stocks that can contribute to long-term share price growth too.
AI and weight loss drugs
Top holdings include Novo Nordisk and Microsoft. Both companies have been firing on all cylinders lately, which highlights the managers’ high-quality stock selection.
Novo Nordisk, the 100-year-old Danish pharmaceutical giant, is seeing tremendous growth due to its weight loss drugs Ozempic and Wegovy.
Meanwhile, Microsoft is benefiting from surging cloud computing demand, partly fueled by the growth of generative AI tools like ChatGPT from OpenAI (which it owns nearly half of).
As mentioned, the trust’s objective is long-term dividend growth over yield size. So the modest 3.1% yield might not appeal to everyone, and the share price could take a knock if large-cap US stocks fall out of favour.
Lastly, I’ll highlight that the shares are currently trading at an 11% discount to the trust’s net asset value (NAV). Historically speaking, this level of NAV discount is pretty rare, which means there could be a bargain on offer right now.
