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Two stocks on my radar are Alliance Trust (LSE: ATST) and Company Brunner Trust Plc (LSE: BUT).
A large part of this is due to their unique records. However, the future also looks bright.
Let's take a closer look.
Investment trusts to succeed
Alliance is one of the largest and oldest trusts in the UK, with roots dating back to the 1800s. The trust invests in some of the most respected businesses around the world.
Similarly, Brunner is also set up as an investment trust, with similar objectives. It looks to invest in UK and international businesses to provide their investors with above average returns.
I am a big fan of investment trusts, as they are often run by professional stock pickers. Also, by investing in many businesses around the world, it gives me diversification that I might not get from investing in individual stocks.
My investment case
Both Alliance and Brunner have increased their profits in a row for over 50 years! This is amazing, in my opinion.
I know that the past is no indicator of the future. In addition, benefits are not guaranteed. However, when looking to build wealth, I prefer equity stocks with a good record of shareholder value and consistent returns.
Looking specifically at the Alliance, I am excited about its future prospects. The business has a large portion of its growing assets in US technology stocks. This includes names like Meta and Microsoft, as well as Nvidia. The Artificial Intelligence (AI) boom may present tremendous growth opportunities. And, as the digitalization of the world increases, these companies, along with the trust, can continue to increase earnings and returns.
Alliance shares trade at a price-to-earnings ratio of just five, making them look like great value for money. Also, a dividend yield of just over 2% would be good growth.
Moving on to Brunner, which holds similar assets, the business is refocusing on other areas that can provide positive growth and returns. Some of these sectors include financial services, as well as industry and infrastructure.
From a fundamental perspective, the shares are a little more attractive, but still attractive, trading at a P/E ratio of 14. The dividend yield of 1.7% is likely to increase, along with continued growth in payouts, in line with its previous record. .
Risks and final thoughts
For Alliance, high exposure to US tech stocks is risky. This is because economic instability across the lake can hurt these businesses, and their income can be disrupted by any negative outlook. We have recently seen the turmoil in the US hurt many stocks.
Looking at Brunner's risk, the similarities continue when looking at bearish factors. I am concerned that exposure to cyclical sectors such as financial services could hurt the trust's profits and rate of return. For example, financial stocks have been hurt around the world due to high interest rates, inflation, and country crises.
Overall, I'm interested in dividend stocks that offer consistent returns, and not just high yields. For that reason, I will look to buy shares in both of these trusts when I can next.
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