A Self-Invested Personal Pension (SIPP) is an investment vehicle that by its very nature involves taking a long-term view. As a believer in long-term investing, that suits me well.
Here are a trio of shares I see as exceptional that, at the right price, I would be happy to own in my SIPP.
Diageo
Drinks maker Diageo (LSE: DGE) was a share I had been eyeing for a while. But what I saw as an expensive share price put me off buying. The past year though, has seen that price fall. It is 15% lower than it was 12 months ago.
That price fall reflects investor concerns. The company’s soft business performance in Latin America lately could be a sign of things to come elsewhere, as weak economic performance and declining alcohol consumption levels among younger consumers threaten to eat into demand for high-end booze.
Still, Diageo has been branching into non-alcoholic drinks in recent years. Meanwhile, its portfolio of premium beer and spirit brands continues to be a profit machine year after year.
That has helped it build an exceptional track record of raising its dividend per share annually for over three decades. That means Diageo is one of the FTSE 100’s few Dividend Aristocrats.
Spirax
Another of those serial dividend raisers is Spirax (LSE: SPX). Diageo may not be much of a household brand (unlike many of its tipples) — but that is even truer of Spirax.
Selling industrial products like steam engineering components to business customers, that lack of widespread brand awareness is unsurprising. But while it may not be flashy, Spirax is a solid example of a successful business.
It has identified a large, resilient market. Its products are critical to the smooth running of a large range of industrial machines, meaning that customers are willing to pay a premium for quality even in a weak economy. That has helped the company grow its dividend each year for far longer even than Diageo.
But while Spirax has an excellent business and exceptional dividend record, it also has a share price to reflect that.
Trading at 26 times earnings, Spirax is too expensive for me to add it to my SIPP at the moment. It faces risks including weak demand in China that has already hurt profits. While revenues grew last year, post-tax profits fell 18%.
Scottish Mortgage
Scottish Mortgage Investment Trust (LSE: SMT) may not have raised its dividend per share annually with the same gusto as Spirax but its record is still exceptional. The fund last cut its dividend in the aftermath of the 1929 stock market crash.
That does not mean it is stuck in the past though. Far from it. The investment trust has built a portfolio of growth stocks from countries around the globe. Over the past five years, that has seen the share price grow by 78% (even after a 44% fall since its 2021 high).
Investing in businesses with unproven models is a risk. Scottish Mortgage owns shares in battery maker Northvolt, for example, and that firm currently faces sizeable challenges including low-cost overseas competition.
Over the long run though, Scottish Mortgage’s approach has proven it can generate substantial gains. I think it is a share investors should consider buying for their SIPP.
