There are a number of reasons why I think Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) could be the best ASX share.
Known as Soul Patts, this business is an investment conglomerate that has been operating for more than a century. However, it's not just the longevity that attracts me to Soul Patts, the below three reasons are very attractive attributes too:
Management
Soul Patts is managed by people with the long-term in mind. They are significant shareholders themselves, so that would hopefully make them less likely to invest in high-risk businesses which could lead to permanent capital loss. Shareholder alignment is very important for a business that makes investment decisions.
More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families. This business is set up for the long-term.
Diversified holdings
Soul Patts has grown into a diverse business with holdings in many different industries including property, listed investment companies (LICs), resources, telecommunications and pharmaceuticals.
Some of its biggest holdings at the moment are TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC). It's quite different from an ASX index fund.
Over time the company will continue to expand into newer sectors which reflect the economic opportunities of the future.
Growing dividend
One of the most important things to understand about a business is how you will receive the returns. Will it be dividends? Share buy-backs? Continuous re-investment? A lot of capital has been burned by management of other businesses wanting to build an empire for themselves.
Soul Patts is committed to growing its dividend every year and that is likely to continue as long as its underlying profit and cashflow continues to improve over the years. Its annual ordinary dividend has increased every year since 2000.
Foolish takeaway
Soul Patts is now trading with a grossed-up dividend yield of 3.4%. It certainly isn't trading cheaply, but it looks much better than a few months ago. I would be very happy to make a long-term buy today and hold for many decades to come.
