Why Soul Patts could be the best dividend stock

There aren’t many shares on the ASX that I’d be happy to say that would suit nearly every investor’s portfolio.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) could be one of those shares that could be a good fit, particularly for dividend stock investors, for the following reasons:


Soul Patts has a fantastic dividend record over the past two decades. It has increased its annual ordinary dividend every years since 2000. Only Ramsay Health Care Limited (ASX: RHC) can match that record on the ASX.

It’s not as though Soul Patts is paying out all of its profit to grow the dividend. In the-half year report to 31 January 2018 it reported that its dividend was 74.69% of regular operating cash flows, which offers a sustainable dividend payout ratio.

The current grossed-up dividend yield is 4%.


I like that Soul Patts offers investors a diversified set of investments due to the conglomerate nature of its business.

It has large stakes in businesses like TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC). It has investments in many other smaller businesses, both listed and unlisted.

I also like that Soul Patts has the flexibility to change its investments, it’s not as though you’re stuck with it being a retail business or resource business like many other major ASX companies.


The Soul Patts management is made up of people that have served the company over multiple generations of families. These families are also large shareholders of the Soul Patts business, meaning they are very motivated to create good shareholder returns.

I believe the best way to generate long-term returns is to, obviously, invest for the long-term. Having the same management for many years allows the business to build for the long-term and pass on that mentality to the next generation.

Foolish takeaway

Soul Patts has soundly outperformed the ASX Index over the past 10 and 15 year periods. I believe there’s a good chance it will continue to beat the index whilst paying an increasing dividend. I don’t think it would be a great value buy today because of how much the share price has risen, but if it drops below $17 it could be interesting to me again.

Want another exciting dividend idea? This top income stock just increased its dividend by more than 25%!

Breaking news: ASX companies set to raise dividends!

It's been a nail-biter of a reporting season here in the first half of 2018.

But the real action, in my opinion, is what companies are doing with dividends.

What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.

Click here it's FREE!

Motley Fool contributor Tristan Harrison owns shares of Ramsay Health Care Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended TPG Telecom Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.