Are Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares the best option for dividend growth investors?
‘Soul Patts’ (as its more commonly known) might have gotten a bit of a reputation as a disappointment. Unlike most of the ASX blue-chips, SOL shares are actually lower today than they were at the start of the year.
In fact, if you take Soul’s 52-week range of $19.70–$31.87, today’s share price of $21.40 is looking very bleak indeed. But Soul Patts is not famous for making its investors wealthy through huge share price appreciation.
This company is ASX dividend royalty – being only one of two ASX stocks to have raised its dividend every single year of this century so far (even through the GFC).
Not only does it have this impressive crown, Soul Patts can actually boast to have paid a dividend every single year since its listing in 1903. So I think its record of dividend growth speaks for itself.
So does this make Soul Patts the best ASX dividend growth share on the market today?
In my opinion, yes.
Here’s why: Soul Patts was founded as a chain of chemists, but long ago decided to branch out into the world of investing itself.
Today, Soul Patts owns a substantial portfolio of other high-quality ASX companies – companies that it selects for their underlying fundamentals, and ability to pay dividends.
Some of its holdings include:
- a 44% holding in Brickworks Ltd (ASX: BKW)
- a 25.3% stake in TPG Telecom Ltd (ASX: TPM)
- an 8.6% stake in BKI Investment Company Ltd (ASX: BKI)
- a 50% stake in New Hope Corporation Limited (ASX: NHC)
- a 19.3% share of Australian Pharmaceutical Industries Ltd (ASX: API)
So already you can see that Soul Patts has a remarkably diverse set of companies from which it draws a dividend. Both Brickworks and TPG are stocks that have very defensive earnings bases, so that also helps to keep the cash coming in regardless of the economic weather.
For these reasons, I think Soul Patts is the best dividend-growth company you can get on the ASX, and would form a great backbone of any income-focused portfolio. With all of the businesses this company owns, buying SOL shares is really a 10-for-1 investment. What more could you ask for?
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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. 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.