Why the Washington H. Soul Pattinson and Co. Ltd share price is rising today

Credit: Iman Mosaad

Shares in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) edged higher in morning trade after the company revealed a half-year net profit of $95.4 million, up 41.7% over the prior corresponding period.

The group operates as a diversified investment house with substantial holdings in TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Australian Pharmaceutical Industries Ltd (ASX: API).

All three of these holdings performed strongly over the half-year period and the group’s focus on providing strong long-term returns is one of its main attractions.

The jewel in its investing crown is the one-quarter holding of TPG Telecom valued at around $2.15 billion. Over the reporting period that stake increased in value by around $115 million, with TPG shares up nearly 10% or so just in the last two days.

The group’s stake in the Priceline pharmacy owner Australian Pharmaceutical Industries also rocketed around 31% in value to help lift Soul Patts shares some 20% over the last six months.

The one thorn in the group’s side remains its exposure to weak coal prices via its investment in New Hope Corporation Limited (ASX: NHC), which fell 13.6% or $129 million in value over the period.

Coal prices have been falling for a long time as the industry faces several headwinds, although it’s not impossible that the cycle will turn to benefit Washington H. Soul Pattinson investors.

The group’s chairman flagged that the business is one of only two from the ASX All Ordinaries Index that has increased dividends each year over the last 15 years.

The interim dividend this year is 21 cents per share, an increase of 5% over last year’s interim dividend of 20 cents per share.

The company retains a strong balance sheet is conservatively managed and has a blockbuster holding in TPG Telecom. For that reason it looks one of the best stocks on the ASX for investors seeking a mix of income and growth.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

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