Soul Patts could be a really good ASX share to own for a few reasons.
The post 3 reasons why Soul Patts (ASX:SOL) could be a great share to own appeared first on The Motley Fool Australia. –
There are several reasons why Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), AKA Soul Patts, could be a good ASX share to own for the long-term.
What does Soul Patts do?
It was set up over a century ago as a pharmacy business. However, the company has since diversified to become a large investment conglomerate.
Not only is the business old, but it actually has very loyal and long-term serving employees.
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.
But there’s much more to the business than simply long-term management.
Here are three reasons to consider owning Soul Patts:
The ASX share may be the most diversified business within the S&P/ASX 200 Index (ASX: XJO).
It owns a portfolio of different investments that are listed and unlisted.
The investment conglomerate doesn’t operate as just a retailer, bank or miner. It’s across a broad range of industries including telecommunications, building products, resources, agriculture, financial services and healthcare.
In terms of the actual listed investments it owns, these are some of the largest holdings: TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), Brickworks Limited (ASX: BKW), Pengana Capital Group Ltd (ASX: PCG), Bki Investment Co Ltd (ASX: BKI), Australian Pharmaceutical Industries Ltd (ASX: API) and New Hope Corporation Limited (ASX: NHC).
It also has investments in unlisted businesses like Aquatic Achievers (swimming schools), Ampcontrol (electrical products) and Round Oak Minerals (resources).
A diversified portfolio is meant to reduce risks.
Effective investment strategy
Soul Patts aims to have a diversified portfolio of uncorrelated investment across listed shares, private equity and venture capital, property, corporate loans and cash.
A flexible investment mandate allows Soul Patts to back companies at an early stage and grow with them over the long-term.
It aims to be counter cyclical and have a value-focused approach.
Soul Patts also says that it’s a trusted partner that actively assists its portfolio companies in accessing growth capital and undertaking strategic acquisitions.
At 31 January 2021, Soul Patts reported that its total shareholder returns (TSR) over the previous 10 years had been an average of 11.4% per annum, beating the All Ordinaries Accumulation Index by an average of 3.5% per annum.
Soul Patts has a long dividend growth record. It has increased its annual dividend every year since 2000. It has also increased its interim dividend for 23 years in a row.
The current dividend yield is low after a strong run of the Soul Patts share price. The trailing grossed-up dividend yield is 2.4%.
Should you invest $1,000 in Soul Patts right now?
Before you consider Soul Patts, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Soul Patts wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.