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:
Dividend
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%.
Diversification
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.
Continuity
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.
