Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is one of the oldest listed companies on the ASX, having been around since 1903. It's often compared to Warren Buffett's Berkshire Hathaway with the way it operates and its long term planning.
Here are three reasons I think 'Soul Patts' could be one of the best dividend stocks in Australia.
1. Dividend history
Soul Patts has paid a dividend every single year, even through wars and economic crashes. In terms of recent history, excluding special dividends, Soul Patts has increased its dividend consecutively for the last 16 years. With a current grossed up dividend yield of 4.67% it's not the highest payer out there, but it's a decent starting point.
2. Diverse investments
Soul Patts has a strong and diverse array of assets, it has large holdings in a number of different companies. At the year end date of 31 July 2016 it owned 25.2% of TPG Telecom Ltd (ASX: TPM), 44.1% of Brickworks Limited (ASX: BKW), 24.6% of Australian Pharmaceutical Industries Ltd (ASX: API) and 10.3% of Bki Investment Co Ltd (ASX: BKI) among other investments.
Diversification is one of the key things to focus on as investors, Soul Patts can give good diversification by buying just one stock.
3. Family Run
One of the most underrated aspects of evaluating a business is the quality of its management. Having a long term focus is the best way to ensure excellent performance. Five generations of the Pattinson Family and three generations of the Dixson, Spence, Rowe and Letters families have served Soul Patts.
Having a long term management team that can plan for many years at a time is a powerful force for Soul Patts.
Is it time to buy?
Soul Patts has been hit with the recent share price decline in the telecommunications sector as TPG is its biggest holding, around 45% of its assets are just in TPG shares. Consequently, Soul Patts shares are 12.5% down from the January 2016 high of $18.11, to the current price of $15.86.
This price decline in Soul Patts shares doesn't seem to have quite reflected the fall in TPG shares. However, it has still created a better entry price than we've seen for most of 2016.
Soul Patts shares are currently trading with a price/earnings ratio of 25.5, but I think this could be a reasonable price to pay for the strength, quality and diversification that Soul Patts can offer and would be good for any investor's long term portfolio.
