Why Soul Patts (ASX:SOL) is such a strong ASX dividend share

Washington H. Soul Pattinson and Co. Ltd (ASX:SOL), AKA Soul Patts, is a very strong ASX dividend share for a number of reasons.
The post Why Soul Patts (ASX:SOL) is such a strong ASX dividend share appeared first on The Motley Fool Australia. –

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Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), also known as Soul Patts, is one of the strongest ASX dividend shares around.

What is Soul Patts?

It’s an investment conglomerate that has been listed since 1903. That makes it one of the oldest businesses on the ASX.

Soul Patts started off as a pharmacy business but now it’s diversified across a number of sectors.

The business has been served by multiple generations of some families. More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.

The long-term nature of the employees means that the business itself can plan and act in the company’s long-term interests. They themselves are sizeable shareholders of the business, so they’re certainly aligned.


One of the strongest things about the current Soul Patts business is that it’s invested in a number of sectors.

Some of the biggest ones include telecommunications, building products, resources, listed investment companies (LICs), financial services, agriculture, pharmacies, swimming schools and property.

In terms of actual businesses, it’s biggest listed investments includes TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Pengana International Equities Ltd (ASX: PIA), Pengana Capital Group Ltd (ASX: PCG), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT).

Flexible investment mandate

Soul Patts is not stuck being a telco or a bank like Telstra Corporation Ltd (ASX: TLS) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

This investment mandate gives Soul Patts the ability to pick whatever investment it wants in whichever sector it’s targeting, listed or unlisted.

It gives the investment team a wide array of potential opportunities which allows it to find the right ideas at the different points of economic cycles.

That’s how it has ended up with a portfolio ranging from agriculture to luxury retirement living.

Dividend growth

Soul Patts has a very impressive dividend record, particularly for an ASX share.

It has increased its dividend every year going back to 2000. Soul Patts has also paid a dividend every year going back to 1903, including through wars, recessions and COVID-19.

That dividend growth is funded by the cashflow of investment income from its portfolio. That comprises dividends, distributions and interest income.

Each year, Soul Patts pays a dividend from that net cashflow (after expenses). It holds back some of the cashflow to reinvest into more opportunities. This adds more cashflow, like a growing snowball that’s rolling downhill each year.

What’s the ASX dividend share’s yield?

At the current Soul Patts share price it offers a grossed-up dividend yield of 2.9%.

That’s not very high, the big search for yield by income investors has driven up share prices. However, the yield remains comfortably higher than what you can get in interest from the bank.

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Returns As of 15th February 2021

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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Soul Patts (ASX:SOL) is such a strong ASX dividend share appeared first on The Motley Fool Australia.

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