Why I think Soul Patts is the best dividend stock on the ASX

The job of being a dividend investor is getting harder these days.

Some of the favourites like Telstra Corporation Ltd (ASX: TLS) and G8 Education Limited (ASX: GEM) have reduced their dividends.

The big banks like Commonwealth Bank of Australia (ASX: CBA) seem to be under siege from all sides with growth a distant memory.

Some of the genuine strong dividend stocks like Sydney Airport Holdings Ltd (ASX: SYD) and Transurban Group (ASX: TCL) are trading at expensive levels, particularly with interest rates predicted to continue rising.

So, what’s a dividend investor to do?

Well, listed investment companies (LICs) are an option, but most of those are trading expensively too.

I think that Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) could be the dividend choice that investors need.

The first thing to look at is of course, the dividend. It’s currently sitting at 4.6% grossed-up, which is comfortably higher than the interest rate you can get at a bank.

The other main thing I love about the dividend is that it has been increased every year since 2000, even through the GFC. That’s a great record and shows the management’s willingness and effort to increase the dividend every single year, as long as it remains prudent to do so.

In-fact, Soul Patts has paid a dividend every single year including through wars.

I also like Soul Patts’ long-term focus. It has management from families that are in their third or fourth generation of serving the company. Those families also own a lot of Soul Patts shares, meaning management are extremely aligned to shareholders because they are shareholders themselves.

The investments that Soul Patts makes are for the long-term too. The investment conglomerate house buys stakes of businesses with the intention of holding for a long time, which gives it the best chance to generate long-term returns. Investments in companies like TPG Telecom Ltd (ASX: TPM) should work out in the long run.

Foolish takeaway

Soul Patts has outperformed the ASX over long time periods like 10 years and 15 years whilst delivering a growing stream of fully franked dividends. I think it’s the most reliable dividend stock out there, which is why I’m a shareholder.

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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 Telstra Limited, TPG Telecom Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended G8 Education Limited and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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