The Motley Fool

Why I would love to buy this ASX income star and never sell it 

Washington H Soul Pattinson & Co. Ltd (ASX: SOL) invests in coal mining, pharmaceuticals, telecommunications and building materials. Often referred to as Australia’s Berkshire Hathaway Equivalent, Soul Patts has been a portfolio stalwart for many investors. 

In the last 15 years, Soul Pattinson has returned shareholders an average of 12.8% per year compared to the 8.9% per year from the All Ordinaries Accumulation Index.  

In the last ten years, Soul Patts has earned $7.55 per share whilst paying $4.68 in fully franked dividends. As such, Soul Patts has retained $2.87 in earnings and has increased book value per share from $6.58 to $13.61 

Based on these figures, Soul Patts has turned $2.87 in retained earnings into $7.03 book value growth. This is largely due to the growth of Soul Patts larger holdings, TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW) and New Hope Corporation (ASX: NHC) 

Soul Patts has a market capitalisation of $4.71 billion and a P/E ratio of 14.9. Simply put, the historical financial performance and current price tag of this company makes it a very attractive option for investors. 

Soul Patts is expected to increase its dividend to $0.58c in FY 2019.

The reality is, Washington H Soul Pattinson & Company knows what its doing. They are seasoned investors with a track record of success. For that reason, it is without question that this business is a must consider for every investor. 

However, is the current price tag worth it? 

Timing the market and predicting corrections is a futile activity. Ultimately, you are purchasing a company with a cheaper P/E ratio than most, one that will provide you just under a 3% dividend yield and a sound investment approach via its strategies. 

Foolish takeaway

Whilst the share price may fluctuate in the short term, I expect Washington H Soul Pattinson & Company to continue compounding returns and delivering great results for shareholders. 

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