I think that Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), AKA Soul Patts, is a dirt-cheap Warren Buffett share. I believe it should be your top pick right now.
I haven’t been writing about it much in recent weeks as trading rules didn’t allow – I have been purchasing shares and interested in buying more on price weakness.
Soul Patts is my largest position in my portfolio, I’ve long said it’s one of the shares I want to hold forever.
When you hold a portfolio of shares you understand and hold conviction in, you have a much better chance of knowing what to do in times like this with the coronavirus. The lower Soul Patts share price makes me even more attracted to buy shares of the investment conglomerate.
Why am I so confident about Soul Patts?
Each of its individual holdings may not be that exciting. But together they create a portfolio of uncorrelated, diversified assets. The underlying values of each of its large holdings are holding up well because of some of their defensive characteristics.
It’s during volatile periods like this that Soul Patts really comes into its own. It has calm, long-term management. It’s likely to be looking at some beaten-up businesses that could be good investments right now.
The upcoming merger between TPG and Vodafone Australia could be a very helpful boost for sentiment about TPG and Soul Patts, particularly if the special dividend heads Soul Patts’ way in the next few months.
Soul Patts operates just like Berkshire Hathaway where they can both in any business or asset they want, listed or unlisted. That flexibility is very useful for generating long-term returns for shareholders.
It has already been around for over 100 years and the way it operates gives me confidence it will be around for many more decades to come. Finding an investment you can hold for the ultra-long-term is very helpful in terms of lowering taxation costs and brokerage fees.
With private hospital operator Ramsay Health Care Limited (ASX: RHC) recently ending its dividend streak, Soul Patts is now the leading dividend provider on the ASX. Its dividend growth record goes back to 2000 and it has guided it intends to grow the dividend this year.
At the current share price of around $18 it has a grossed-up dividend yield of 4.75%. That is a solid yield considering how low Australian interest rates are. The Soul Patts share price is 22% lower than before the share market crash. I think it looks like a good long-term buy today.
Where to invest $1,000 right now
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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended 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.
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