Scottish Mortgage Investment Trust (LSE:SMT) shares might not be top of your list if you’re hunting dividend stocks. If they’re not, you may be making a huge mistake. Most technology trusts reinvest earnings in pursuit of growth, with dividend distributions playing second fiddle.
That’s not all. The vast majority of software stocks are highly cyclical in nature. So when times get tough and earnings come under pressure, dividends can be chopped or even cancelled, impacting the income these investment trusts pay.
Not so with Scottish Mortgage. It’s actually paid a growing dividend for 43 straight years. What’s more, over the last decade, payouts have risen at a healthy average annual growth rate of 4.6%.
| Year ending March… | Dividend per share |
|---|---|
| 2026 | 4.57p |
| 2025 | 4.38p |
| 2024 | 4.24p |
| 2023 | 4.1p |
| 2022 | 3.59p |
| 2021 | 3.42p |
| 2020 | 3.25p |
| 2019 | 3.13p |
| 2018 | 3.07p |
| 2017 | 3p |
So what makes the FTSE 100 company such a formidable dividend growth stock? And can the dividends keep on climbing?
Tech titan
As I’ve mentioned, this particular trust focuses on the growth-heavy technology sector. The result? Dividends that have risen sharply along with earnings.
This wasn’t always the case. Scottish Mortgage — founded in 1909 — only made its first tech investment in 2004 when it bought Amazon stock. Today, it has holdings in 50 private and publicly listed businesses, ranging from SpaceEx and Nvidia to Shopify, Cloudflare, and Meta Platforms.
The trust’s tech pivot has led to both strong dividend growth and rapid capital appreciation. As I say, dividends have risen at an annualised rate of above 4% over 10 years. Average annual share price growth has been even more impressive at 19.6%.
Why so strong?
Don’t get me wrong — the dividend distributions are modest in relation to broader earnings. Scottish Mortgage’s payout ratio was 1.44% in financial year 2026. But what this means is shareholder rewards are more sustainable over time.
The dividend yields aren’t the highest the FTSE 100 has to offer. They’ve averaged just 0.5% each year over the last decade. Yet payouts have consistently grown above the rate of retail price inflation (RPI). This means investors have enjoyed income growth that’s outstripped the rising cost of living.
There’s another reason why the FTSE company’s dividend growth is so reliable. As an investment trust, it can retain surplus income during strong years. And so it can keep raising payouts even when portfolio income comes under temporary pressure.
Finally, through its focus on technology, Scottish Mortgage’s portfolio is well diversified. The companies it holds are located across the globe. And they operate across a variety of industries, such as e-commerce, semiconductors, software, electric vehicles (EVs), and social media. This protects earnings — and by extension dividends — from localised shocks.
Can Scottish Mortgage keep delivering?
The question is, can dividends on Scottish Mortgage shares keep consistently rising? Dividends are never guaranteed, and for a cyclical-type trust like this, shareholder returns could slump in the event of an economic downturn.
Yet, for the reasons I’ve mentioned, I believe Scottish Mortgage will remain one of the FTSE’s best dividend growth shares.
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Royston Wild does not hold any positions in the companies mentioned.
