The Motley Fool

Is Soul Patts the best dividend share on the ASX?

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares could be the best dividend investment on the ASX right now. ‘Soul Patts’ (as the company is more commonly known) has an enviable dividend record and its propensity to invest in other quality ASX companies has led some commentators over the years to label the company the ‘Berkshire Hathaway of the ASX’.

So, is Soul Patts really the Berkshire of the ASX, with the best dividend to boot?

What does Washington H. Soul Pattinson do?

Soul Patts was founded way back in 1872 in Sydney as a pharmacy, of which it still owns a chain of. Over the years, the company has branched out from the pharmacy business and today owns large stakes in a wide range of public companies on the ASX. These include TPG Telecom Ltd (ASX: TPM), of which Soul Patts owns a 25% stake; New Hope Group Ltd (ASX: NHC), a 50% stake; Brickworks Limited (ASX: BKW), a 44% stake; and Milton Corporation Ltd (ASX: MLT), with Soul Patts owning a 3.8% stake.

As you can see, this is a diversified portfolio of dividend-paying companies that forms the foundation of this company in its modern form – as well as its reputation as the ASX’s Berkshire Hathaway.

What about the dividends?

SOL is one of only two ASX companies to have a record of increasing its dividend every year since 2000 (the other is Ramsay Health Care Limited (ASX: RHC)). This dividend has increased at a compounded annual rate of 8.3% since that time. In addition, the company has also paid a dividend every year since its public listing in 1903 – including through the Great Depression and both World Wars.  

With such an impressive payout history, it’s hard to argue against Soul Patts being the best dividend stock on the ASX.

Foolish takeaway

With its diversified portfolio of quality ASX companies together with its unrivalled history of dividend payouts, Soul Patts is an essential part of any dividend portfolio (in my opinion). Management at Soul Patts has demonstrated exceptional experience and temperament to manage its shareholder’s capital with a long investment horizon. If you’re considering a new dividend stock, I think this is a great place to start.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks and 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.