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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 a lot.
Here are a trio of stocks that I consider exceptional and, at the right price, I would be happy to have in my SIPP.
Diageo
beverage maker Diageo (LSE:DGE) was a stock I had been watching for a while. But what I saw as an expensive share price dissuaded me from buying. However, last year the price fell. It is 15% lower than 12 months ago.
That price drop reflects investor concerns. The company's weak business performance in Latin America lately could be a sign of things to come elsewhere, as weak economic performance and declining levels of alcohol consumption among younger consumers threaten to dent demand for high-end alcoholic beverages.
Still, Diageo has diversified into non-alcoholic beverages in recent years. Meanwhile, its portfolio of premium beer and spirits brands remains a year-on-year profit machine.
That has helped it build an exceptional track record of increasing its dividend per share annually for more than three decades. That means Diageo is one of the FTSE 100The few dividend aristocrats.
Spirax
Another one of those serial dividend collectors is Spirax (LSE: SPX). Diageo may not be a household brand (unlike many of its drinks), but that's even more true of Spirax.
When selling industrial products such as steam engineering components to enterprise customers, such a lack of widespread brand awareness is not surprising. But while it may not be flashy, Spirax is a solid example of a successful business.
You have identified a large and resilient market. Its products are critical to the smooth operation of a wide range of industrial machines, meaning customers are willing to pay more for quality even in a weak economy. That has helped the company increase its dividend every year for much longer, even than Diageo.
But while Spirax has an excellent business and an exceptional dividend history, its share price also reflects this.
Trading at 26 times earnings, Spirax is too expensive to add to my SIPP at the moment. It faces risks including weak demand in China that has already hit its profits. While revenue grew last year, after-tax profits fell 18%.
Scottish mortgage
Scottish Mortgage Investment Trust (LSE:SMT) may not have increased its dividend per share annually with the same enthusiasm as Spirax, but its track record is still exceptional. The fund last cut its dividend after the 1929 stock market crash.
However, that doesn't mean you're stuck in the past. Nothing of the sort. The investment trust has built a portfolio of growth stocks from countries around the world. Over the past five years, the share price has grown 78% (even after a 44% drop from its 2021 high).
Investing in companies with unproven models is a risk. Scottish Mortgage owns shares in battery maker Northvolt, for example, and that company currently faces significant challenges, including low-cost foreign competition.
However, in the long term, Scottish Mortgage's approach has proven that it can generate substantial profits. I think it is a stock that investors should consider buying for their SIPP.
